Energy consumption‐economic growth nexus: How does sectorial differentials affects sustainable development?

Abstract

AbstractEnergy, being one of the significant drivers of growth, has gained much focus in the last four decades. A connection between energy and growth exists in the economy: on the one hand, energy is a vital factor of production while growth improves living standards, which increases energy consumption on the other hand. Previous studies on the energy‐growth nexus paid less attention to sectorial differentials in the consumption of energy and growth. Also, the literature could not relate that to sustainable development. Thus, this study explores the sectorial differentials in energy consumption and how they affect the energy‐growth nexus within the context of sustainable development. The research employed secondary data for 46 sub‐Saharan Africa (SSA) countries for the period 2007 to 2020. Using the General Methods of Moments estimation technique, we found that all the measures of energy consumption positively affect economic growth. Also, CO2 intensity is positively related to growth in the economy while CO2 emissions from solid fuels negatively affect economic growth. Again, Foreign Direct Investment (FDI) is positively impacting economic growth and Gross Domestic Product (SSA) per energy use. Policy implications are discussed in the paper.