Energy consumption, Electricity consumption and Human Development in Iran: A Bounds Test Approach

Studies on the relationship between energy consumption and economic growth have mostly used per capita gross domestic product or GDP to measure economic growth. Such an approach cannot explain the increase in economic development and human development. This paper uses ARDL method and Bound tests to examine the relationship between per capita energy consumption, per capita electricity consumption and human development as a proxy of human well-being for period 1971 to 2011 in Iran. Results indicate that per capita consumption of energy in the short-term and in the long-term have a negative impact on the human development index. Per capita electricity consumption has a significant positive impact on human development in the short-term and in the long-term. Results also show that in the long-term, the impact of per capita electricity consumption is about two times the impact of energy consumption. Results of causality tests show a two-way causality relationship between energy consumption and human development and, a two-way causality relationship between electricity consumption and human development in the long-term.