Relating energy consumption to real sector value added and growth in a developing economy

Abstract

PurposeThe main aim of this study was to examine whether any relationship exists between energy consumption and value added of the agricultural and industrial sector as well as the overall growth rate of the Nigerian economy.Design/methodology/approachThe study used annualized time series data from 1971 to 2014 drawn from the World Bank Development Indicators, adopting an autoregressive distributed lag technique in the data analyses as well as the bound test and error correction representation.FindingsThere is a very strong evidence of the existence of a long-run relationship between energy consumption and indicators of economic growth. There are very strong proofs that economic growth and agricultural value added adjust to the shocks and dynamics of the studied energy-consumption-related variables while manufacturing value added proved otherwise.Originality valueNo study to the best of our knowledge has brought together aggregate growth, agricultural value added and manufacturing value added in the investigation of the energy consumption and economic growth nexus in one study using the Nigerian stylized economic environment. This represents the value added of this study and shows its originality.