Electricity consumption and economic growth in Ghana: how significant are electricity transmission losses?

Abstract

Purpose The purpose of this study is to analyze the nonlinear relationship between electricity consumption (EC) and electricity transmission losses (ETL) in Ghana. Also, we examined how ETL moderate the effect of EC on economic growth in Ghana from 1980 to 2021. Design/methodology/approach We used timeseries data from 1980 to 2021 within an autoregressive distributed lag framework to analyze the links among ETL, EC and economic growth in Ghana. Findings Findings show the existence of an asymmetric long-run relationship between EC and ETL. Also, the negative effects of ETL on EC are bigger in the long run. In addition, ETL and EC combine to reduce economic growth, in the long run, providing evidence for the energy-led growth theory in Ghana. Population and inflation were also found to have a significant effect on economic growth in Ghana. Originality/value We examined the nonlinear nexus of EC and ETL, which extant studies have ignored in discussing the link between EC and economic growth. Again, we showed that ETL reduces EC causing a reduction in economic growth.