How Does Energy Consumption Matter for Economic Growth? A Bayesian Data Analysis

Energy is traditionally regarded to significantly contribute to most economic activities. Countries select the type of energy most appropriate for their needs based on geographical conditions and capital, technology, and labor availability. However, most earlier studies used various frequentist methods, which produced so far different findings. This study focuses on clarifying the effects of renewable and non-renewable energy on economic growth in the ASEAN-5 countries: Malaysia, Philippines, Singapore, Thailand and Vietnam. By unitizing a Bayesian Markov chain Monte Carlo (MCMC) sampling algorithm on a panel data sample for 1990–2019, the estimation results provide new evidence on the contribution of energy consumption to economic growth in the investigated nations. As a result, non-renewable energy has a positive impact on economic growth while renewable energy exerts the opposite effect. That is because of an extensive, energy-intensive growth model followed by the ASEAN countries, in which non-renewable energy is an important engine of economic growth.