SUPPLY OF HYDROPOWER AS AN ALTERNATIVE ENERGY SOURCE IN MALAYSIA: IMPLICATIONS FOR ECONOMIC GROWTH

Back to Page Authors: Yasin Ahmed Sulub, Zarinah Hamid

---

Keywords: Hydropower supply, Renewable energy, Economic Growth, Malaysia

---

Abstract: Empirical research on the nexus between renewable energy (RE) supply and economic growth have been neglected. To address this gap, the aim of this study is to examine the relationship between hydropower energy supply and economic growth in Malaysia for the 1978-2016 period. This study utilized the Auto-Regressive Distributive Lag (ARDL) and Bounds Test for Co-integration. The results from the ARDL and Bounds Test indicate a long-run equilibrium relationship between hydropower supply, gross fixed capital formation, energy use per capita and GDP, with the respective coefficients positive and statistically significant. The Vector Error Correction Model (VECM) through Granger causality test does not confirm causality between hydropower supply and GDP growth. However, a unidirectional causality running from energy use per capita to GDP growth was detected. According to the sustainable energy development authority Malaysia (SEDA), the development of RE has to rise to 18% from 2010 to 2030. The findings of this study have implications for policymakers to exploit maximally the abundant renewable energy sources in Malaysia, especially the hydropower energy, encourage its consumption, and resolve the issues restraining the implementation of RE. A further policy implication is discussed.

---