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Electricity Consumption and Economic Growth in Nigeria: A Causality Analysis using ARDL Approach

International Journal of Economics and Management Studies
© 2023 by SSRG - IJEMS Journal
Volume 10 Issue 10
Year of Publication : 2023
Authors : Etim Akan, Alwell Nteegah, Barisua Nwinee
10.14445/23939125/IJEMS-V10I10P105
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How to Cite?

Etim Akan, Alwell Nteegah, Barisua Nwinee, "Electricity Consumption and Economic Growth in Nigeria: A Causality Analysis using ARDL Approach," SSRG International Journal of Economics and Management Studies, vol. 10,  no. 10, pp. 35-46, 2023. Crossref, https://doi.org/10.14445/23939125/IJEMS-V10I10P105

Abstract:

This study examines the causality relationship between electricity consumption and economic growth in Nigeria using time-series data between 1990 and 2020. The Autoregressive Distributed Lag (ARDL) model was used as the analytical technique, with electricity consumption and Gross Domestic Product (GDP) as the independent and dependent variables, respectively. The research uses secondary data with various validation tests. The outcome of the cointegration test revealed the existence of a long-run relationship between the variables. Electricity consumption by the commercial sector has a short-term negative and insignificant effect on GDP. Consumption by the industrial sector had a positive and significant correlation with GDP both in the short and long term. Residential consumption had a long-term, significant positive correlation with GDP. The outcome of this study underscores the need for the Nigerian government to implement strategic reforms to promote investments in the electricity sector to help boost consumption and contribute to economic development in the country.

Keywords:

ARDL, Causality, Electricity, GDP, Macroeconomic indices.

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