Natural gas consumption and economic development in China and Japan: An empirical examination of the Asian context

This paper examined the relationship between natural gas consumption and economic development in two largest natural gas consumers in Asia, namely, China and Japan for the period of 1980-2012. It used the autoregressive distributed lags (ARDL) method for the empirical analysis. The findings revealed some similarities in the natural gas consumption and economic development nexus in China and Japan. Thus, a cointegration relationship between natural gas consumption and economic development was found to exist both in China and Japan. However, there was an important difference in the findings. In the case of China, the findings indicated the existence of a unidirectional causality from natural gas consumption to economic development, which was in line with the growth hypothesis. In Japan, there was a bidirectional causality between natural gas consumption and economic development, which supported the feedback hypothesis.