EMPIRICAL ANALYSIS OF ELECTRICITY SUPPLY ON ECONOMIC GROWTH, EVIDENCE FROM NIGERIA1980-2013

Theophilus Ifeanyi Ugwoke, Appolonia Chioma Ugwoke

Abstract


This paper dwelt on empirical analysis of electricity supply on economic growth, Evidence from Nigeria1980-2013 using the Cobb Douglas production function in line with the similar study by Gbadebo and Okonkwo (2009). The choice of this model is very relevant to the topic of the study  as it includes two important factors of any production activity viz: capital and labour. The data used in this paper are basically secondary data and time series data.  The ordinary least squares (OLS) techniques were used because of its blue qualities.  GDP is taken as the dependent variable proxied for economic growth while electricity industrial consumption, gross capital formation, labour force and foreign direct investment are taken as the explanatory or independent variables. The results of the ordinary least squares test show that there exists a positive relationship between economic growth of Nigeria and all the independent variables except FDI.  All the variables are rightly signed except foreign direct investment.  Employing the Augmented Dickey Fuller (ADF) test to check for the integrating  order of the variables, it was found that at level, all the variables were not stationary, but achieved stationarity at first order integration. The Johansen test was conducted to check if the variables are co-integrated and it was found that at 5% significant level, all the variables are co-integrating.  Therefore, we reject the null hypothesis and conclude that there exists a long-run relationship between electricity supply and economic growth of Nigeria. The study recommends that government should intensify action in support of policies that encourage private sector participation in the provision of electricity. Also, the study recommends that government should encourage and support the utilization of the abundant renewable energy sources in the country which will not only increase the revenue base of the nation but also reduce the emission of hazardous pollutants associated with the use of non-renewable energy sources.

Keywords


Labour force; Electricity consumption; Gross capital formation and Economic Growth

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