Electricity Consumption and Economic Growth: Evidence From Nigeria
Main Article Content
Abstract
As one of the significant components of energy consumption, the importance of electricity to economic growth has been recognized by economists and business people, engineering, and government agencies. This paper seeks to investigate the impact of electricity consumption on economic growth in Nigeria from 1986 to 2021 by using the Autoregressive Distributed Lag (ARDL) model. The properties of the series were first checked using Augmented Dickey fuller (ADF) and Phillip Peron (PP) unit root tests, and the result found a mixture of the order of integration, which paved the use ARDL model. The findings of the ARDL bond test indicate the present cointegration. Evidence from the short run reveals that the speed of adjustment is negative and statically significant, confirming the expected equilibrium process in the short-run dynamics among the variables under study. The results also show that energy consumption, inflation, and industrial product are statistically significant and positively affect Nigeria's short and long-run economic growth. At the same time, Unemployment is negative and statistically significant both in the short and long run. Based on the findings, the paper recommends that government should undertake serious measures to curtail the shortage of electricity consumption in the country to promote economic growth in general. The government should adopt appropriate policies to reduce Unemployment, adversely affecting economic growth.
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How to Cite
Mohammed, B. S. (2023). Electricity Consumption and Economic Growth: Evidence From Nigeria. Invest Journal of Sharia & Economic Law, 3(1), 1-21. https://doi.org/10.21154/invest.v3i1.5949
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Atems, Bebonchu, and Chelsea Hotaling. ‘The Effect of Renewable and Nonrenewable Electricity Generation on Economic Growth’. Energy Policy 112 (January 2018): 111–18. https://doi.org/10.1016/j.enpol.2017.10.015.
Aydin, Mucahit. ‘Renewable and Non-Renewable Electricity Consumption–Economic Growth Nexus: Evidence from OECD Countries’. Renewable Energy 136 (June 2019): 599–606. https://doi.org/10.1016/j.renene.2019.01.008.
Balcilar, Mehmet, Festus Victor Bekun, and Gizem Uzuner. ‘Revisiting the Economic Growth and Electricity Consumption Nexus in Pakistan’. Environmental Science and Pollution Research 26, no. 12 (2019): 12158–70. https://doi.org/10.1007/s11356-019-04598-0.
Bekun, Festus Victor, and Mary Oluwatoyin Agboola. ‘Electricity Consumption and Economic Growth Nexus: Evidence from Maki Cointegration’. Engineering Economics 30, no. 1 (25 February 2019): 14–23. https://doi.org/10.5755/j01.ee.30.1.20748.
Best, Rohan, and Paul J. Burke. ‘Electricity Availability: A Precondition for Faster Economic Growth?’ Energy Economics 74 (August 2018): 321–29. https://doi.org/10.1016/j.eneco.2018.06.018.
Bevir, Mark. ‘World Development Indicators’. Encyclopedia of Governance, 2012. https://doi.org/10.4135/9781412952613.n571.
Bretschger, Lucas, Filippo Lechthaler, Sebastian Rausch, and Lin Zhang. ‘Knowledge Diffusion, Endogenous Growth, and the Costs of Global Climate Policy’. European Economic Review 93 (April 2017): 47–72. https://doi.org/10.1016/j.euroecorev.2016.11.012.
Burke, Paul J., David I. Stern, and Stephan B. Bruns. ‘The Impact of Electricity on Economic Development: A Macroeconomic Perspective’. International Review of Environmental and Resource Economics, 2018. https://doi.org/10.1561/101.00000101.
Chen, Chaoyi, Mehmet Pinar, and Thanasis Stengos. ‘Renewable Energy Consumption and Economic Growth Nexus: Evidence from a Threshold Model’. Energy Policy 139 (April 2020): 111295. https://doi.org/10.1016/j.enpol.2020.111295.
Churchill, Sefa Awaworyi, and Kris Ivanovski. ‘Electricity Consumption and Economic Growth across Australian States and Territories’. Applied Economics 52, no. 8 (13 February 2020): 866–78. https://doi.org/10.1080/00036846.2019.1659932.
Costa-Campi, M. T., J. García-Quevedo, and E. Trujillo-Baute. ‘Electricity Regulation and Economic Growth’. Energy Policy 113 (February 2018): 232–38. https://doi.org/10.1016/j.enpol.2017.11.004.
Energy Information Administration. ‘U.S. Economy and Electricity Demand Growth Are Linked, but Relationship Is Changing’. EIA Web Site, 2013. http://www.eia.gov/todayinenergy/detail.cfm?id=10491.
Feng, D, C Jiang, G Lim, L J Cimini, G Feng, and G Y Li. ‘A Survey of Energy-Efficient Wireless Communications’. IEEE Communications Surveys & Tutorials 15, no. 1 (2013): 167–78. https://doi.org/10.1109/SURV.2012.020212.00049.
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Imam, Mahmud I., Tooraj Jamasb, and Manuel Llorca. ‘Sector Reforms and Institutional Corruption: Evidence from Electricity Industry in Sub-Saharan Africa’. Energy Policy 129 (June 2019): 532–45. https://doi.org/10.1016/j.enpol.2019.02.043.
Iyke, Bernard Njindan. ‘Electricity Consumption and Economic Growth in Nigeria: A Revisit of the Energy-Growth Debate’. Energy Economics 51 (September 2015): 166–76. https://doi.org/10.1016/j.eneco.2015.05.024.
Khokhar, Tariq. ‘World Bank Open Data’. World Bank Blogs, 2017. https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS.
Lawal, Adedoyin Isola, Ilhan Ozturk, Ifedolapo O. Olanipekun, and Abiola John Asaleye. ‘Examining the Linkages between Electricity Consumption and Economic Growth in African Economies’. Energy 208 (October 2020): 118363. https://doi.org/10.1016/j.energy.2020.118363.
Majeed, Muhammad Tariq, Aisha Tauqir, Maria Mazhar, and Isma Samreen. ‘Asymmetric Effects of Energy Consumption and Economic Growth on Ecological Footprint: New Evidence from Pakistan’. Environmental Science and Pollution Research 28, no. 25 (2021): 32945–61. https://doi.org/10.1007/s11356-021-13130-2.
Nathaniel, Solomon P., and Festus V. Bekun. ‘Electricity Consumption, Urbanization, and Economic Growth in Nigeria: New Insights from Combined Cointegration amidst Structural Breaks’. Journal of Public Affairs 21, no. 1 (25 February 2021). https://doi.org/10.1002/pa.2102.
Nathaniel, Solomon Prince, and Festus Victor Bekun. ‘Environmental Management amidst Energy Use, Urbanization, Trade Openness, and Deforestation: The Nigerian Experience’. Journal of Public Affairs 20, no. 2 (14 May 2020). https://doi.org/10.1002/pa.2037.
Ogunleye, Eric Kehinde. ‘Political Economy of Nigerian Power Sector Reform’. In World Institute for Development Economics Research, 1–29. Oxford University PressOxford, 2016. https://doi.org/10.1093/oso/9780198802242.003.0020.
Osisiogu, Ugochukwu A., and P. N. Okafor. ‘On Electric Power Supply Chain Model For Three Different Tariff Customers in South East Nigeria’. International Journal of Scientific Research & Engineering Trends 4, no. 6 (2018): 1041–49.
Oyeyemi, Agbede Moses. ‘Disaggregate Energy Supply and Industrial Output in Nigeria’. International Journal of Economics, Business and Management Research 2, no. 02 (1 January 2018): 154–72.
Pesaran, M. Hashem, Yongcheol Shin, and Richard J. Smith. ‘Bounds Testing Approaches to the Analysis of Level Relationships’. Journal of Applied Econometrics 16, no. 3 (19 May 2001): 289–326. https://doi.org/10.1002/jae.616.
Rahman, Mohammad Mafizur. ‘Environmental Degradation: The Role of Electricity Consumption, Economic Growth and Globalisation’. Journal of Environmental Management 253 (January 2020): 109742. https://doi.org/10.1016/j.jenvman.2019.109742.
Salmon, Claire, and Jeremy Tanguy. ‘Rural Electrification and Household Labor Supply: Evidence from Nigeria’. World Development 82 (June 2016): 48–68. https://doi.org/10.1016/j.worlddev.2016.01.016.
Sankaran, A., Sanjay Kumar, Arjun K, and Mousumi Das. ‘Estimating the Causal Relationship between Electricity Consumption and Industrial Output: ARDL Bounds and Toda-Yamamoto Approaches for Ten Late Industrialized Countries’. Heliyon 5, no. 6 (June 2019): e01904. https://doi.org/10.1016/j.heliyon.2019.e01904.
Sekantsi, Lira Peter, and Nicholas Okot. ‘Electricity Consumption–Economic Growth Nexus in Uganda’. Energy Sources, Part B: Economics, Planning and Policy 11, no. 12 (8 December 2016): 1144–49. https://doi.org/10.1080/15567249.2015.1010022.
Simpson, E. S. ‘Electricity Production in Nigeria’. Economic Geography 45, no. 3 (19 May 1969): 239. https://doi.org/10.2307/143093.
Tamba, Jean Gaston, Jean Luc Nsouandélé, Armand Fopah Lélé, and Flavian Emmanuel Sapnken. ‘Electricity Consumption and Economic Growth: Evidence from Cameroon’. Energy Sources, Part B: Economics, Planning and Policy 12, no. 11 (2 November 2017): 1007–14. https://doi.org/10.1080/15567249.2017.1349211.
Tiwari, Aviral Kumar, Leena Mary Eapen, and Sthanu R. Nair. ‘Electricity Consumption and Economic Growth at the State and Sectoral Level in India: Evidence Using Heterogeneous Panel Data Methods’. Energy Economics 94 (February 2021): 105064. https://doi.org/10.1016/j.eneco.2020.105064.
Ukoima, Kelvin, and Ekwe Ogbonnaya Agwu. ‘Review of the Impact of Electricity Supply on Economic Growth : A Nigerian Case Study Review of the Impact of Electricity Supply on Economic Growth : A Nigerian Case Study’. IOSR Journal of Electrical and Electronics Engineering 14, no. February (9 June 2019): 28–34. www.iosrjournals.org 29.
United Nations Development Programme. ‘Access to Electricity’. UNDP Sustainable Energy Hub, n.d. https://www.undp.org/energy/our-work-areas/energy-access/access-electricity.
Usman, Ahmed, Ilhan Ozturk, Ali Hassan, Syeda Maria Zafar, and Sana Ullah. ‘The Effect of ICT on Energy Consumption and Economic Growth in South Asian Economies: An Empirical Analysis’. Telematics and Informatics 58 (May 2021): 101537. https://doi.org/10.1016/j.tele.2020.101537.
Yu, Zhongdong, Wei Liu, Liming Chen, Serkan Eti, Hasan Dinçer, and Serhat Yüksel. ‘The Effects of Electricity Production on Industrial Development and Sustainable Economic Growth: A VAR Analysis for BRICS Countries’. Sustainability (Switzerland) 11, no. 21 (23 October 2019): 5895. https://doi.org/10.3390/su11215895.