The Validity of Electricity Consumption as an Indicator for Economic Evaluation: Cross-Country Analysis

Abstract: This article aims to investigate the validity of using electricity consumption as an indicator to evaluate economic conditions and explore the relationship of this indicator across different countries. The study reveals a positive correlation between electricity consumption and the growth rate of Gross Domestic Product (GDP), which becomes more significant in the post-21st century period for middle-income, high-income countries, and globally. The relationship between the growth rate of industrial value-added and electricity consumption exhibits dynamic variations. It weakens for lower-middle-income countries but strengthens for upper-middle-income and high-income countries in the post-21st century. Moreover, there is a strong positive correlation between the logarithm of GDP and the logarithm of electricity consumption, particularly pronounced for high-income countries, with a significant increase in correlation in the 21st century. Similarly, a strong positive correlation exists between the logarithm of industrial value-added and the logarithm of electricity consumption, especially notable for high-income countries where the correlation further intensifies in the post-21st century. In conclusion, electricity consumption can serve as an effective indicator for evaluating economic conditions, with its relationship to economic growth and industrialization influenced by the income level of countries.