On the Nexus of Energy Use - Economic Development: A Panel Approach

Gross Domestic Product (GDP) is inefficient for evaluating sustainable development, and the most suitable indicator for this is the Index of Sustainable Economic Welfare (ISEW). This paper focuses on distinguishing the ISEW from GDP, mainly through the study of the energy consumption - economic growth nexus. The traditional hypotheses were tested using a Panel-Corrected Standard Errors estimator for twenty-two countries for the time span from 1995 to 2013. The findings show substantial differences between GDP and ISEW. This paper contributes to the discussion about the consequences of these two approaches for the design of suitable policies for a sustainable future.