IMPACT OF ENERGY CONSUMPTION ON ECONOMIC GROWTH IN NIGERIA: AN AUTOREGRESSIVE DISTRIBUTED LAG (ARDL) APPROACH
Muhammad Sagir Dutin-ma, Sani Abdullahi and Ahmed Lawi Lawal
Volume 7 Issue 1
Abstract
This study was designed to analyze the relationship between energy consumption and economic growth in Nigeria using annual time series data from 1981 to 2019. The energy sources used to test for this relationship were oil and electricity consumption. The methodology used in the study is ARDL Approach to Cointegration. Starting with the test for stationarity (ADF and PP), the result revealed that all the variables (real GDP, oil consumption and electricity consumption) have a unit root at level, but become stationary at first difference, thus implying I(1) series. The finding of the research further shows that, there is a stable long run relationship between real GDP, oil consumption and electricity consumption, thus, indication a causal relationship in at least one direction. The estimated long run model indicates that oil consumption is a significant positive determinant of economic growth. However, electricity consumption is a negative insignificant determinant. In the short run, the coefficient of the error correction term is -0.0637 suggesting about 6.37 percent annual adjustment towards long run equilibrium. The study further recommends that huge investment is needed and should be encouraged to both local and foreign investors in the energy generating sector of the Nigerian economy.
Download Paper