Examining The Relationship Between Electricity Consumption And Economic Growth in Nigeria

ABSTRACT

Economic growth is an important indicator of a society‟s wellbeing and its ability to sustain it over a period. It enables a rise in living standards and a greater consumption of goods and services. It is underpinned by a rise in real gross domestic product (GDP). Energy is a key component of the modern society and is used heavily in the production of output. Ghana has seen mixed results in its yearly economic growth since independence. It has also suffered various challenges in electricity production. This study aims to examine the connection between electricity consumption and the economic growth of Ghana using a bivariate approach and relying on the ARDL Bounds Testing method. The results points to cointegration between electricity consumption and economic growth where the conservation hypothesis is upheld in the case of Ghana. It is established by this study that a uni-directional causality runs from economic growth to electricity consumption but not the other way round. Based on this finding, policies that lead to the conservation of electricity does not adversely impact economic growth of the nation. It is thus recommended that Ghana implements policies which may lead to the efficient use of energy to safeguard the environment and also lead to sustainability of power generation.