Effects of energy consumption on human development and industrial sector performance in selected Sub-Saharan Africa and OECD countries: comparative analysis

Abstract

ABSTRACT The objectives of this study are to implicitly investigate the relationship that exist between energy consumption (renewable and non-renewable energy) and human development (with the Human Development Index as proxy); and energy consumption and industrial sector performance (with industrial output as proxy) in selected sub-Saharan Africa and the Organization for Economic Co-operation and Development (OECD) countries. Four groups of models were specified and estimated using Panel data for 21 countries according to income criteria from 1990 to 2022. These data were analyzed using Panel Ordinary Least Square (OLS) before which they were filtered with the use of Augmented Dickey Fuller (ADF) unit root test while the Johansen cointegration test was used to justify the long-run relationship among all included variables. The findings of this study revealed that energy consumption was positively related and statistically significant in explaining changes in human development and industrial sector performance in the selected sub-Saharan Africa and the OECD countries. However, changes in Human Development Index (HDI) were not statistically significant in explaining changes inindustrial sector performance in both regions. The results of the estimated models revealed a three-way directional causality among the selected variables. Additionally, it was established that a significant gap exist in human development, energy consumption and industrial sector performance, in favour of the selected OECD countries. Furthermore, it was also established that energy consumption and industrial output are potent determinants of human development in the selected OECD and sub-Saharan African Countries.