The important objective of this paper is to study the long run relationship between Energy Consumption (EC) and traditional Human Development Index (tHDI) and impact of Energy Consumption on tradional Human Development Index. The scope of this study is that the energy consumption has a great role to play in enhancing economic growth and maintaining better quality of life and overall human development. The authors have used panel cointegration test to study the long term relationship between traditional Human Development Index and Energy Consumption. To study the impact of Energy Consumption on traditional Human Development Index, panel regression is used. Findings have confirmed the existence of the long run relationship between each other and the Energy Consumption has a significantly positive impact on traditional Human Development Index. To see how EC affects and change HDI an alternative New HDI is also introduced by incorporating energy consumption along with existing indices included in tHDI. After incorporating the energy component in New HDI, most of the countries HDI value slipped except few developed countries.
Keywords: Human development, energy consumption, panel data
P28, Q43, O15