article · Energies
An econometric evaluation assesses the dynamic impacts of energy consumption, energy prices, and dependence on imported energy on overall and sectoral value-added outputs in Sri Lanka. By using methods that account for structural breaks in data, the study demonstrates that energy consumption homogeneously supports gross, agricultural, industrial, and services value-added figures. In contrast, positive oil price shocks and an increased reliance on imported energy dampen growth, especially across gross, industrial, and services sectors. The combined effects of volatile oil prices and energy import dependence also suppress growth. Causality analyses show bidirectional links between energy use and both gross and industrial value-addition, but energy use does not causally drive agricultural or services value-added. The results highlight the necessity of targeted energy policy reforms to support long-term economic progress.
Understanding how energy factors influence different parts of an economy allows policymakers to protect vital sectors from external shocks. Because oil price spikes and imported fuel dependency harm industrial and services growth, clear economic data helps governments identify vulnerabilities. These insights guide national energy reforms that shield developing economies from global fuel market volatility and ensure balanced, sustainable sectoral growth.
The abstract does not indicate a commercialisation pathway or direct commercial product. The work represents early-stage macroeconomic and econometric research intended to inform national energy policy reforms and economic planning. The primary users would be government ministries, energy regulators, and economic strategists seeking to balance fuel imports with sectoral growth requirements, rather than commercial industry partners developing market technologies.
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Drifting away from the neoclassical growth conjecture of economic growth being solely dependent on capital and labor inputs, this paper aimed to evaluate the dynamic impacts of energy consumption, energy prices and imported energy-dependency on both gross and sectoral value-added figures of Sri Lanka. The analysis has particularly used the robust econometric methods that can account for structural break issues in the data. The results, in a nutshell, indicated that energy consumption homogeneously contributes to gross, agricultural, industrial and services value-additions in Sri Lanka. However, positive oil price shocks and greater shares of imported energy in the total energy consumption figures are found to dampen the growth figures, especially in the context of the gross, industrial and services value additions. Besides, the joint growth-inhibiting impacts of oil price movements and energy import-dependency are also ascertained. On the other hand, the causality estimates reveal bidirectional causal associations between energy consumption-gross value-added and energy consumption-industrial value-added. In contrast, no causal impact of energy consumption on the agricultural and services value-added is evidenced. Hence, these findings impose key policy implications for constructing crucial energy policy reforms to make sure that the economic growth performances of Sri Lanka are sustained in the future.
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DOI: 10.3390/en13246565
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