Impact of Energy Consumption on Industrial Growth in Nigerian Economy
Abstract
This research investigates the impact of energy consumption on industrial growth. Manufacturing value added as proxy for industrial growth is used as dependent variable while the independent variables are; energy consumption, labor, and capital. The sample size covers a period of 29 years starting from 1990-2018. The OLS method of egression was used to estimate the equation in the period under review. Unit root test, Co-integration test and Granger causality were carried out to test for stationarity, long run relationship, and causal relationship, respectively. Result shows that there is a positive and significant relationship between energy consumption and manufacturing value added in the period under review. The unit root test shows that all variables are integrated of order one except for the variable capital, which is stationary at level. The Co-integration test indicates that there exists the presence of long-run relationships. The granger causality indicates the neutrality hypothesis in energy-industrial growth nexus in Nigeria. Generally, this paper stresses the dangers poor capacity of power generation from energy sources leading to inadequate electricity supply in the functioning of industries and businesses, which further worsens overall growth in the Nigerian economy.
How to cite this article: Abdulkadir KF, Isik A. Impact of Energy Consumption on Industrial Growth in Nigerian Economy. J Adv Res Humani Social Sci 2020; 7(3): 25-41.
References
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37. Tapsın G. The Link Between Industry Value Added and Electricity Consumption. European Scientific Journal 2017; 13(13): 41-56.
38. Tugcu CT. Disaggregate Energy Consumption and Total Factor Productivity: A Co-integration and Causality Analysis for the Turkish Economy. International Journal of Energy Economics and Policy 2013; 3(3): 307-314.
39. Twerefou DK, Iddrisu KS, Twum EA. Energy Consumption and Economic Growth: Evidence from the West African Sub Region. West African Journal of Applied Ecology 2018; 26: 217-233.
40. Ugwoke TI, Dike CK, Elekwa PO. Electricity Consumption and Industrial Production in Nigeria. Journal of Policy and Development Studies 2016; 10(2): 8-19.
41. Vo AT, Vo DH, Le QT. CO2 Emissions, Energy Consumption, and Economic Growth: New Evidence in the ASEAN Countries. Journal of Risk and Financial Management 2019; 12(145): 1-20.
42. Yakubu MM, Jelilov G. Effect of Energy Consumption on GDP Evidence from (Ten) Sub-Saharan Africa Countries. Nile Journal of Business and Economics 2017; 5: 3-14.
43. Yakubu Y, Manu SB, Bala U. Electricity Supply and Manufacturing Output in Nigeria: Autoregressive Distributed Lag (ARDL) Bound Testing Approach. Journal of Economics and Sustainable Development 2015; 6(17): 7-19.
2. Abid M, Mraihi R. Energy Consumption and Industrial Production: Evidence from Tunisia at Both Aggregated and Disaggregated Levels. Journal of the Knowledge Economy 2015; 6: 1123-1137.
3. Abokyi E, Appiah-Konadu P, Sikayena I et al. Consumption of Electricity and Industrial Growth in the Case of Ghana. Journal of Energy 2018; 1-11.
4. Abosedra S, Shahbaz M, Sbia R. The Links between Energy Consumption, Financial Development, and Economic Growth in Lebanon: Evidence from Cointegration with Unknown Structural Breaks. Journal of Energy 2015; 1-15.
5. Adenikinju A. Efficiency of the Energy Sector and its Impact on the Competitiveness of the Nigerian Economy. International Association for Energy Economics 2008; 27-31.
6. Ahmed M, Shimada K. The Effect of Renewable Energy Consumption on Sustainable Economic Development: Evidence from Emerging and Developing Economies. Energies 2019; 12(2954): 1-15.
7. Akiri SE, Ijuo OA, Apochi MP. Electricity Supply and Manufacturing Productivity in Nigeria (1980-2012). IOSR Journal of Economics and Finance (IOSR-JEF), 2015; 6(6): 90-94.
8. Apaydin G, Gungor A, Taġdoga C. The Asymmetric Effects of Renewable Energy Consumption on Economic Growth in Turkey. Journal of Mehmet Akif Ersoy 2019; 6(1): 117-134.
9. Arminen H, Menegaki AN. Corruption, Climate, and the Energy-Environment-Growth Nexus. Energy Economics 2019; 80: 629-634.
10. Beji S, Belhadj A. What are the Determining Factors of Industrialization in Africa? Federalismi.it, 2014; 1-20.
11. Bercu A, Paraschiv G, Lupu D. Investigating the Energy–Economic Growth–Governance Nexus: Evidence from Central and Eastern European Countries. Sustainability 2019; 11(3555): 1-21.
12. Bernard OA, Oludare A. Is Energy Consumption Relevant to Industrial Output in Nigeria?. European Journal of Research in Social Sciences 2016; 4(4): 1-14.
13. Biodun AA. The Power Sector and Industrial Development in Nigeria: Power Holding Company of Nigeria. Lahti: Lahti University of Applied Sciences. 2011.
14. Danmaraya IA, Hassan S. Electricity Consumption and Manufacturing Sector Productivity in Nigeria: An Autoregressive Distributed Lag-bounds Testing Approach. International Journal of Energy Economics and Policy 2016; 6(2): 195-201.
15. Dickey DA, Fuller AW. Distribution of the Estimators for Autoregressive Time Series with a Unit Root. Journal of the American Statistical Association 1979; 74: 427-431.
16. Ekpo UN. Nigeria Industrial Policies and Industrial Sector Performance: Analytical Exploration. IOSR Journal of Economics and Finance 2014; 3(4): 1-11.
17. Fatai BO. Energy Consumption and Economic Growth Nexus: Panel Co-integration and Causality Tests for Sub-Saharan Africa. Journal of Energy in Southern Africa 2014; 25(4): 93-100.
18. Granger CW. Investigating Causal Relations by Econometric Models and Cross-Spectral Methods. Econometrica 1969; 429-438.
19. Hassine MB, Harrathi N. The Causal Links between Economic Growth, Renewable Energy, FinancialDevelopment, and Foreign Trade in Gulf Cooperation
Council Countries. International Journal of Energy Economics and Policy 2017; 7(2): 76-85.
20. Johansen S. Statistical Analysis of Cointegration Vectors. Journal of Economic Dynamics and Control 1988; 231-254.
21. Kasperowicz R. Electricity Consumption and Economic Growth: Evidence from Poland. Journal of International Studies 2014; 7(1): 46-57.
22. Korsakienėa R, Tvaronavičienėa M, Smaliukienėa R. Impact of Energy Prices on Industrial Sector Development and Export: Lithuania in the Context Of Baltic States. Procedia - Social and Behavioral Sciences 2013; 461-469.
23. Kümmel R, Lindenberger D. How Energy Conversion Drives Economic Growth Far From the Equilibrium of Neoclassical Economics. New Journal of Physics 2014; 16: 1-21.
24. Mawejje J, Mawejje DN. Electricity consumption and sectoral output in Uganda: an empirical investigation. Journal of Economic Structures 2016; 5(21): 1-16.
25. Meidani AAN, Zabihi M. Energy Consumption and Real GDP in Iran. International Journal of Energy Economics and Policy 2012; 4(1): 15-25.
26. Muftaudeen OO, Omojolaibi JA. Electricity Consumption, Institutions, and Economic Growth in Nigeria. Journal of Economics and Sustainable Development 2014; 5(12): 40-55.
27. Nkalo UK, Agwu EO. Review of the Impact of Electricity Supply on Economic Growth: A Nigerian Case Study. IOSR Journal of Electrical and Electronics Engineering (IOSR-JEEE) 2018; 14(1): 28-34.
28. Nwajinka CC, Akekere JY, John PO. National Electric Energy Supply and Industrial Productivity in Nigeria from 1970 to 2010. Journal of Economics and Sustainable Development 2013; 4(14): 122-129.
29. Nwosa PI. Aggregate Energy Consumption and Sectoral Output in Nigeria. An International Multidisciplinary Journal, Ethiopia 2012; 6(4): 206-215.
30. Ohwofasa BO, Obeh HO, Erakpoweri J. The Impact of Electricity Supply on Economic Growth, 1980-2010: An Error Correction Method. Research Journal of Finance and Accounting 2015; 6(5): 124-128.
31. Okoligwe NE, Ihugba OA. Relationship between Electricity Consumption and Economic Growth: Evidence From Nigeria (1971-2012). Academic Journal of Interdisciplinary Studies 2014; 3(5): 137-152.
32. Olufemi OJ. The Effects of Electricity Consumption on Industrial Growth in Nigeria. Journal of Economics and Sustainable Development 2015; 6(13): 54-59.
33. Olugbenga TK, Jumah AA, Phillips DA. The Current and Future Challenges of the Electricity Market in Nigeria in the Face of Deregulation Process. African Journal of Engineering Research 2013; 1(2): 33-39.
34. Qazi AQ, Ahmed K, Mudassar M. Disaggregate Energy Consumption and Industrial Output in Pakistan: An Empirical Analysis. Economics: The Open-access, Openassessment E-journal 2012; 1-14.
35. Romer PM. Endogenous Technological Change. NBER Working Paper Series (pp. 1-41). Cambridge: National Bureau of Economic Research. 1989; 1-41.
36. Sankaran A, Kumar S, Arjun K et al. Estimating the Causal Relationship between Electricity Consumption and
Industrial Output: ARDL bounds and Toda-Yamamoto Approaches for Ten Late Industrialized Countries. Heliyon, 2019; 5.
37. Tapsın G. The Link Between Industry Value Added and Electricity Consumption. European Scientific Journal 2017; 13(13): 41-56.
38. Tugcu CT. Disaggregate Energy Consumption and Total Factor Productivity: A Co-integration and Causality Analysis for the Turkish Economy. International Journal of Energy Economics and Policy 2013; 3(3): 307-314.
39. Twerefou DK, Iddrisu KS, Twum EA. Energy Consumption and Economic Growth: Evidence from the West African Sub Region. West African Journal of Applied Ecology 2018; 26: 217-233.
40. Ugwoke TI, Dike CK, Elekwa PO. Electricity Consumption and Industrial Production in Nigeria. Journal of Policy and Development Studies 2016; 10(2): 8-19.
41. Vo AT, Vo DH, Le QT. CO2 Emissions, Energy Consumption, and Economic Growth: New Evidence in the ASEAN Countries. Journal of Risk and Financial Management 2019; 12(145): 1-20.
42. Yakubu MM, Jelilov G. Effect of Energy Consumption on GDP Evidence from (Ten) Sub-Saharan Africa Countries. Nile Journal of Business and Economics 2017; 5: 3-14.
43. Yakubu Y, Manu SB, Bala U. Electricity Supply and Manufacturing Output in Nigeria: Autoregressive Distributed Lag (ARDL) Bound Testing Approach. Journal of Economics and Sustainable Development 2015; 6(17): 7-19.
Published
2021-09-10
How to Cite
ABDULKADIR, Kassim Fatima; ISIK, Abdurrahman.
Impact of Energy Consumption on Industrial Growth in Nigerian Economy.
Journal of Advanced Research in Humanities and Social Sciences, [S.l.], v. 7, n. 3, p. 25-41, sep. 2021.
ISSN 2349-2872.
Available at: <http://thejournalshouse.com/index.php/Journal-Humanities-SocialScience/article/view/330>. Date accessed: 22 jan. 2025.
Section
Articles
