Abstract
Energy consumption is an important indicator of economic modernization and in general the more developed a nation, the more their level of consumption. Improved productivity can unlock development and this is enhanced by availability and accessibility of electricity supply to the manufacturing and industrial sector. Hence this study analyzes the impact of electricity consumed by only the manufacturing and industrial sector; excluding the consumption for domestic use so as to test the energy-growth hypothesis for Nigeria over the period 1981 to 2019. The study also included the impact of electricity consumption on manufacturing output. The analysis was done using OLS techniques and ECM. The results revealed a positive significant relationship between manufacturing output and electricity consumption as well as an inverse relationship between electricity consumption and economic growth in the long run. Granger causality was also done and a unidirectional causality was found from economic growth to electricity consumption; showing support for the conservation hypothesis of the Energy-growth hypothesis. Unidirectional causality was also found from manufacturing to electricity consumption as well. The study recommends the need to develop huge infrastructure for adequate supply of electricity because as the economy grows the need for electricity consumption will increase. DOI: 10.7176/JETP/11-5-03 Publication date: October 31 st 2021
Highlights
Availability of infrastructure is paramount for development
This study examined the relationship between electricity supply for industrial and commercial use, economic growth and manufacturing output and covers the period 1991 to 2018
The study examined the relationship between manufacturing output, economic growth and electricity consumption in Nigeria over the period 1991 to 2019
Summary
Availability of infrastructure is paramount for development. Every country desiring development devotes resources to provision of infrastructure like electricity, good roads, water and telecommunication to mention a few. This study examined the relationship between electricity supply for industrial and commercial use, economic growth and manufacturing output and covers the period 1991 to 2018 This scope is limited by availability of data on disaggregated electricity consumption for earlier years. Adegbemi et al (2013) in an empirical study on energy consumption and economic growth in Nigeria reported that electricity was found to be statistically significant with a positive impact on economic growth They evaluated the causal nexus over the period 1975 to 2010 using co-integration and Ordinary Least Squares (OLS) techniques. George-Anokwuru & Ekpenyong (2020) investigated electricity consumption and economic growth in Nigeria using Auto-Regressive Distributed Lag model with GDP as dependent variable They reported a positive and statistically significant relationship between GDP and electricity consumption in both the short and long run. Chow test was used to check for significance of structural break
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