Determinants of energy consumption : a review of the Philippine energy sector

Abstract

Energy is considered a vital component for economic growth and human development. When its availability is disrupted, several economic sectors could not function fully to its extent. Energy consumption is influenced by several variables that affect it directly or indirectly. This study was conducted to evaluate the impact of GDP, industrialization, urbanization, trade openness, financial development, and FDI on the energy consumption of the Philippines; and to present the trend of each variable from 1971 to 2014. Data on energy consumption, GDP, industrialization, urbanization, trade openness, financial development, and FDI of the Philippines from 1971 to 2014 were sourced from the World Development Indicators published by the World Bank. The Ordinary Least Squares (OLS) regression analysis was used to analyze and identify those factors that significantly affect the energy consumption of the Philippines. Results indicated that GDP, industrialization, urbanization, and financial development significantly affect the energy consumption of the Philippines. These determinants have p-values that are lower than the 5% significance level. Thus, this study provides the policy and decision-makers with ample information for decisive decision-making in the Philippine energy sector.