Electricity consumption, corruption and economic growth 120 112

Evidence on selected African countries

Abstract

An important prerequisite for reducing poverty, sustainable development and achievement of the millennium development goal has to some extent been tied to access to electricity. However, the subject matter; 'electricity consumption causing economic growth' has seen conflicting results from the theoretical and empirical front, if indeed a relationship exist at all.

The study tests, within a panel context the long-run relationship between electricity consumption and economic growth for 13 African Countries from 2006 to 2017 by employing recently developed panel co-integration techniques. Implementing a three stage approach made up of panel unit root, panel co-integration and Granger causality test to examine the causal relationship between electricity consumption, electricity price, corruption, employment and growth.

The study provides empirical evidence that a bidirectional causal relationship between electricity consumption and economic growth exist in the short run, suggesting that lack of electricity could hamper economic growth as well as an investment in electricity infrastructure would in turn improve economic growth. Also reveals that corruption causes the level of electricity consumption and GDP in the short run. On the long-run front electricity consumption and electricity price granger causes GDP and GDP causes electricity consumption.