The Electricity -Growth Nexus: A Dynamic Panel Data Approach

This paper investigates the dynamic relationship between electricity access and economic growth in a group of 15 developing countries in Sub-Saharan Africa by using a cointegration analysis and an error-correction model over the period 1980 to 2008. Results suggest that a long-term equilibrium relat...

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Bibliographic Details
Published in:The Journal of energy and development 2014-04, Vol.39 (2), p.229-264
Main Author: Ouedraogo, Nadia S
Format: Article
Language:English
Subjects:
Africa
Benin
Burkina Faso
Developing countries
Dynamics
Economic development
Electric power
Electricity
Electricity consumption
Energy consumption
Error correction
Gambia
Ghana
Guinea
Liberia
Niger
Nigeria
Panels
Policies
Senegal
Sierra Leone
Togo
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Summary:This paper investigates the dynamic relationship between electricity access and economic growth in a group of 15 developing countries in Sub-Saharan Africa by using a cointegration analysis and an error-correction model over the period 1980 to 2008. Results suggest that a long-term equilibrium relationship between electricity consumption per capita and real GDP per capita exists for these countries. After the Pedroni panel cointegration tests confirm the existence of a long-term equilibrium relationship, error-correction mechanisms plus causality tests were run as further steps to investigate the causality between electricity consumption and economic growth. The results suggest unidirectional causality running from electricity consumption to GDP in the long run. Overall, it can be said that policies related to electricity consumption have an effect or relation on the level of real output in the long run for the countries under study (Benin, Burkina Faso, Cape Verde, Ivory Coast, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo). The documented evidence from these countries can provide useful information for each government with regard to energy and growth policy.
ISSN:0361-4476