Exploring the Asymmetric Effects of Urbanization and Industrialization on Energy Intensity: A Case Study of Pakistan

In this modern era, investigating the factors influencing energy intensity is a valuable area of research. Although numerous studies have explored the influence of macroeconomic variables on energy intensity, limited research has addressed its asymmetric effects. Recognizing the significance of asymmetries, this study investigates the non-linear impacts of urbanization, industrialization, financial development and education on both aggregate and disaggregate energy intensity in Pakistan. This study utilized data for the period 1972–2022 and followed a relatively new estimation technique: the non-linear autoregressive distributed lag model. The empirical outcomes demonstrated that urbanization and industrialization have a constructive influence on aggregate and household energy intensity, while their impact is adverse in the case of industrial sector energy intensity. The financial development confirmed a constructive influence on both household and industrial sector energy intensity, while its impact was found to be the opposite in the case of aggregate energy intensity. Education exerts a constructive influence on disaggregate energy intensity in the industrial sector and on household energy intensity, while there is an adverse relationship in the case of aggregate energy intensity. These findings suggest that to reverse the rising trend of energy intensity, it is crucial to focus on enhancing basic infrastructure in rural areas and adopting energy-efficient production techniques. Besides this, sound financial systems in the industrial sector and improving education levels also diminish energy intensity and enhance production under the current status quo of the Pakistan economy.