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Energy Consumption, Trade Openness and Economic Growth: Empirical Evidence from Nigeria

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  • Yusuf Opeyemi Akinwale

    (Department of Economics, College of Business Administration, Imam Abdulrahman Bin Faisal University, Dammam, Saudi Arabia.)

Abstract

This paper explores the link between energy consumption, trade openness and economic growth in Nigeria between 1971 and 2015 using Vector error correction model (VECM). The result of Johansen co-integration test shows that the three series are co-integrated, hence long-run relationship was established among them. Causality analysis in VECM shows that there is a long run causality from economic growth and trade openness to energy consumption as well as from economic growth and energy consumption to trade openness. The results of the short run causality indicate the Granger causality from economic growth to trade openness only. These outcomes suggest that trade openness could be boosted by improving production in all sectors of the economy and not the other way round. Also, decisive improvement in economic activities would lead to increase in energy use in the country as the size of the current energy consumption is too weak to cause economic expansion in Nigeria. Furthermore, due to the huge energy gap between demand and supply, Nigerian government should utilise the low carbon energy options towards a sustainable economic growth trajectory.

Suggested Citation

  • Yusuf Opeyemi Akinwale, 2021. "Energy Consumption, Trade Openness and Economic Growth: Empirical Evidence from Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 11(6), pages 373-380.
    • Handle: RePEc:eco:journ2:2021-06-43
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    References listed on IDEAS

    as
    1. Y. O. Akinwale & W. C. Grobler, 2019. "Education, Openness and Economic Growth in South Africa: Empirical Evidence from VECM Analysis," Journal of Developing Areas, Tennessee State University, College of Business, vol. 53(1), pages 51-64, January-M.
    2. Ali Acaravci & Sinan Erdogan & Guray Akalin, 2015. "The Electricity Consumption, Real Income, Trade Openness and Foreign Direct Investment: The Empirical Evidence from Turkey," International Journal of Energy Economics and Policy, Econjournals, vol. 5(4), pages 1050-1057.
    3. A. O. Adepoju & Y. O. Akinwale & I. O. Ogundari, 2018. "Feasibility economic analysis for electricity generation in internal combustion engine sets using landfill gas in Lagos State," African Journal of Science, Technology, Innovation and Development, Taylor & Francis Journals, vol. 10(5), pages 593-599, July.
    4. Yusuf Opeyemi Akinwale, 2018. "An Empirical Analysis of Short Run and Long Run Relationships between Energy Consumption, Technology Innovation and Economic Growth in Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(4), pages 139-146.
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    Cited by:

    1. Yusuf Opeyemi Akinwale, 2022. "Awareness and Perceptions of University Students in the Business College towards Energy Savings and Renewable Energy Sources in Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 12(3), pages 470-476, May.

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    More about this item

    Keywords

    Economic growth; Vector error correction model; Energy consumption; Co-integration; Trade openness;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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