Introduction
Energy resources define the maximum energy production capacity. The resources are broadly classified into renewable and non-renewable resources. The former comprises resources that can never be depleted such as solar, wind, water, wave, tidal, geothermal, and biological energy resources, while the latter encompasses resources that eventually run out such as fossil and nuclear fuels, including uranium, coal, and natural gas. Renewable and non-renewable energy resources are a critical player in economic development. Their immeasurable impact on economic development comes with both positive and negative effects. For instance, most researchers have associated the presence of energy resources with industrial development, infrastructural development, job creation, and increased agricultural production, which all culminate in poverty reduction and economic stability. A close examination of the causal relationship between energy and economic development specifically backs up this claim. Conversely, supporters of the paradox of plenty have associated the abundance of energy resources with the poor economic development and a host of economic woes that plague developing countries (Carbonnier and Grinevald 2011, pp. 3-20). In particular, instead of boosting the economies of their major producers, especially in the Middle East and West Africa, oil and natural gas have resulted in conflicts and exacerbated corruption in a manner that suppresses economic development. Arguably, the abundance of energy resources is both a curse and a blessing with respect to economic development depending on how the resources are managed and governed. In this discussion, it is important to note that energy resources and energy are used interchangeably given that the latter cannot exist without the former, and the effects of the latter originate from the existence of energy resources.
The Causal Relationship between Energy and Economic Growth