Energy Consumption and Economic Growth in Nigeria : A Bounds Testing Cointegration Approach

This study investigates the relationship that exists between energy consumption and economic growth using Nigerian annual time series from 1970-2005. The non-causality approach to causality testing and the bounds testing approach to cointegration, which is based on Autoregressive Distributed Lag (ARDL) procedure proposed are employed. In this study, energy consumption is further disaggrigated into oil, gas and electricity consumption in order to present more robust analysis. The findings reveal a unidirectional causal relationship between total energy consumption and economic growth running from total energy consumption to economic growth. This is also true in the case of oil consumption and economic growth with the direction of causality running from oil consumption. Gas consumption causes growth with no feedback. The study also shows that there is no causal relationship between electricity consumption and economic growth in either direction. The cointegration test identifies long run relationships between total energy consumption and economic growth and also between oil consunption and economic growth. Meanwhile, the cointegration analysis reveals no long run relationship between gas consumption and economic growth and also between electricity consumption and economic growth