Energy Consumption and Economic Growth : A Panel Causal Analysis for East African Sub-Region
The need to address current and future energy needs along with economic growth has raised concerns about the causal relationship between the use of energy and economic growth worldwide. Our study aims to contribute to the current debates on the existence, direction and impact of the causal relationship between the consumption of energy and economic growth in 13 countries in East Africa. Employing the Dumitrescu-Hurlins panel test, we found a causally significant relationship between labour, the use of energy, its price and GDP. The results show that the unidirectional causal relationship is positively and statistically significant, ranging from the use of energy, labour and price to GDP. Furthermore, our findings suggest that the consumption of energy and its price play a significant role in driving economic growth in East Africa, which demonstrates that the consumption of energy in the region is a prerequisite for economic growth and not a by-product of economic growth. Using the two-level SGMM, the results show that the consumption of energy positively and significantly influences GDP at 5%. On the other hand, our results indicate a negative and significant relationship between the price of energy and GDP, suggesting that GDP falls significantly when its price rises. The causality test suggests a unidirectional relationship, running from the consumption of energy, labour and price to GDP in all panel tests. Therefore, we recommend that policies for stimulating economic growth in the East Africa region should always consider promoting the higher consumption of energy at a low price to reap the benefits of sustainable economic growth
Year of publication: |
[2023]
|
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Authors: | kulindwa, Yusuph John |
Publisher: |
[S.l.] : SSRN |
Subject: | Wirtschaftswachstum | Economic growth | Kausalanalyse | Causality analysis | Energiekonsum | Energy consumption | Ostafrika | East Africa |
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