Energy Consumption And Economic Growth: Evidence From The West African Sub-Region

Abstract

The availability of reliable energy supply to meet the exigency of the growing population in West Africa is important in achieving sustainable development and reducing poverty in the continent. Diverse studies have sought to examine the link between energy consumption and growth. However, the consensus with reference to the causal link if any between energy consumption and growth is not explicit. Conflicting conclusions have been espoused on the energy-growth nexus and this has necessitated this study. In this study, we employ panel cointegration and granger causality to examine the relationship between energy consumption disaggregated into total energy consumption, petroleum consumption and electricity consumption for seventeen West African countries for the period 1990 to 2013. The study finds that in the short run, there is no causal relationship running from total energy consumption, electricity consumption and petroleum consumption to growth and from growth to total energy consumption. However, in the short run, the conservation hypothesis is established as there is a unidirectional relationship running from growth to electricity consumption. As well, electricity consumption has a significant effect on petroleum consumption. In the long run, total energy consumption has a negative and significant effect on growth with electricity and petroleum consumption having a positive and significant effect on growth. Also, in the long run, there is no causal relationship among the variables. The study therefore recommends that policies that will enhance access to electricity are implemented.