Energy Generation, Electricity Consumption, and Economic Welfare: A Sustainability Perspective Across Income Classifications

This research examines the relationship between energy generation, electricity produc-11 tion, energy consumption, and economic welfare across countries classified by income 12 level: high-income, upper-middle-income, lower-middle-income, and low-income. It uses 13 annual panel data from 2000 to 2023 sourced from the World Bank’s World Development 14 Indicators (WDI). Based on the World Bank’s income classifications and data availability 15 during the study period, 152 countries were selected, including 49 high-income, 35 upper-16 middle-income, 43 lower-middle-income, and 26 low-income economies. Pedroni cointe-17 gration tests indicate a long-term equilibrium relationship among energy generation, elec-18 tricity production, energy consumption, and economic welfare across all income groups, 19 with Kao cointegration tests confirming these results as robustness checks. The study uti-20 lizes panel dynamic differenced and system Generalized Method of Moments (GMM) to 21 estimate the model. Results reveal a significant positive long-term relationship among the 22 main energy and welfare variables across all income categories. However, when broken 23 down by income class, high-income and upper-middle-income countries show positive 24 associations between energy metrics and economic welfare. In contrast, lower-middle-in-25 come and low-income nations exhibit negative associations. The study recommends poli-26 cies focused on improving living standards and overall economic welfare, especially 27 through providing consistent, affordable, and clean energy.