Abstract
This paper takes a sectoral, panel approach to investigating the electricity-growth nexus for the Eastern Cape province of South Africa between the period of 2003 and 2017. The empirical investigation was carried out using the Pooled Mean Group (PMG) panel estimators applied to an augmented dynamic growth model whilst the causality tests between electricity consumption and growth where performed using the Dumitrescu-Hurlin (2012) panel non-causality tests. The findings confirm the absence of significant long-run relationship between electricity and growth whilst finding a significant and positive effect over the short-run. Moreover, our causality tests provide strong evidence of causality running from electricity consumption to economic growth hence supporting the “growth hypothesis”. In a nutshell, our results not only demonstrate the importance of performing the electricity-growth analysis at provincial level as opposed to relying on national aggregated estimates but also provides important provincial-specific policy implications and recommendations.Keywords: Electricity consumption; Economic Growth; Provincial.JEL Classifications: C13; C33; C51; Q43DOI: https://doi.org/10.32479/ijeep.7889
Highlights
In 2018, South Africa become the first African country to be an official member of the International Energy Agency
Panel Causality Analysis Whilst our findings indicate a positive relationship between electricity consumption and economic growth in the Eastern Cape province over the short-run, we are yet to determine the direction of causality between the variables, that is, does electricity consumption cause economic growth or vice versa? This is important to determine since the finding of unidirectional causality running from electricity consumption to economic growth would validate our fears that load-shedding certainly suppress economic growth in the Eastern Cape province
Provoked by the lack of provincial analysis between the electricitygrowth relationship existing in the literature, our study sought to fill this empirical hiatus with an application to the Eastern Cape province of South Africa
Summary
A number of authors have provided evidence of electricity consumption being an important contributor to economic growth in South Africa providing evidence against electricity conservation policies (Odhiambo (2009), Menyah and WoldeRufael (2010), Bildirici et al (2012), Nyoni and Phiri (2016; 2018), Khobai et al (2017), Bah and Azam (2017) and Nyoni and Phiri (2018)) These studies are based on nation-wide time series data that do not recognize possible heterogeneity effects arising from economic disparities between different regions or provinces within a country.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: International Journal of Energy Economics and Policy
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
