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Electricity consumption and economic growth in South Africa: A trivariate causality test

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  • Odhiambo, Nicholas M.

Abstract

In this paper we examine the causal relationship between electricity consumption and economic growth in South Africa. We incorporate the employment rate as an intermittent variable in the bivariate model between electricity consumption and economic growth--thereby creating a simple trivariate causality framework. Our empirical results show that there is a distinct bidirectional causality between electricity consumption and economic growth in South Africa. In addition, the results show that employment in South Africa Granger-causes economic growth. The results apply irrespective of whether the causality is estimated in the short-run or in the long-run formulation. The study, therefore, recommends that policies geared towards the expansion of the electricity infrastructure should be intensified in South Africa in order to cope with the increasing demand exerted by the country's strong economic growth and rapid industrialisation programme. This will certainly enable the country to avoid unprecedented power outages similar to those experienced in the country in mid-January 2008.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 31 (2009)
Issue (Month): 5 (September)
Pages: 635-640

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Handle: RePEc:eee:eneeco:v:31:y:2009:i:5:p:635-640

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Web page: http://www.elsevier.com/locate/eneco

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Keywords: Africa South Africa Electricity consumption Employment Economic growth;

References

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Citations

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Cited by:
  1. Andreas Georgantopoulos, 2012. "Electricity Consumption and Economic Growth: Analysis and Forecasts using VAR/VEC Approach for Greece with Capital Formation," International Journal of Energy Economics and Policy, Econjournals, vol. 2(4), pages 263-278.
  2. Shahbaz, Muhammad & Tang, Chor Foon & Shahbaz Shabbir, Muhammad, 2011. "Electricity consumption and economic growth nexus in Portugal using cointegration and causality approaches," Energy Policy, Elsevier, vol. 39(6), pages 3529-3536, June.
  3. Muhammad, Shahbaz & Lean, Hooi Hooi, 2011. "The Dynamics of Electricity Consumption and Economic Growth:A Revisit Study of Their Causality in Pakistan," MPRA Paper 33196, University Library of Munich, Germany, revised 06 Sep 2011.
  4. Muhammad, Shahbaz, 2011. "Electricity Consumption, Financial Development and Economic Growth Nexus: A Revisit Study of Their Causality in Pakistan," MPRA Paper 35588, University Library of Munich, Germany, revised 27 Dec 2011.
  5. Bildirici, Melike, 2012. "Economic Growth and Electricity Consumption in Africa and Asia: MS-VAR and MS-GRANGER Causality Analysis," MPRA Paper 40515, University Library of Munich, Germany.
  6. Menyah, Kojo & Wolde-Rufael, Yemane, 2010. "Energy consumption, pollutant emissions and economic growth in South Africa," Energy Economics, Elsevier, vol. 32(6), pages 1374-1382, November.
  7. Saleheen, Khan & Farooq Ahmed, Jam & Muhammad, Shahbaz, 2012. "Electricity Consumption and Economic Growth in Kazakhstan: Fresh Evidence from a Multivariate Framework Analysis," MPRA Paper 43460, University Library of Munich, Germany, revised 20 Dec 2012.
  8. Odhiambo, Nicholas M., 2010. "Energy consumption, prices and economic growth in three SSA countries: A comparative study," Energy Policy, Elsevier, vol. 38(5), pages 2463-2469, May.
  9. Shahbaz, Muhammad & Mutascu, Mihai & Tiwari, Aviral Kumar, 2012. "Revisiting the Relationship between Electricity Consumption, Capital and Economic Growth: Cointegration and Causality Analysis in Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 97-120, September.
  10. Morgan Bazilian & Patrick Nussbaumer & Hans-Holger Rogner & Abeeku Brew-Hammond & Vivien Foster & Shonali Pachauri & Eric Williams & Mark Howells & Philippe Niyongabo & Lawrence Musaba & Brian Ó Gall, 2011. "Energy Access Scenarios to 2030 for the Power Sector in Sub-Saharan Africa," Working Papers 2011.68, Fondazione Eni Enrico Mattei.
  11. Neeliah Harris & Deenapanray Prakash, 2012. "The economic growth and electricity consumption nexus: Evidence from Mauritius," Economics Bulletin, AccessEcon, vol. 32(4), pages 2930-2943.
  12. Janesh Sami, 2011. "Multivariate Cointegration and Causality between Exports, Electricity Consumption and Real Income per Capita: Recent Evidence from Japan," International Journal of Energy Economics and Policy, Econjournals, vol. 1(3), pages 59-68, November.
  13. Roula Inglesi-Lotz, 2012. "The sensitivity of the South African industrial sector’s electricity consumption to electricity price fluctuations," Working Papers 201225, University of Pretoria, Department of Economics.
  14. Bukhari M.S. Sillah & Hamad M.H. Al-Sheikh, 2012. "Income, Price, and Government Expenditure Elasticities of Oil in the Gulf Cooperation Council Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 2(4), pages 333-341.
  15. Godwin Effiong Akpan & Usenobong Friday Akpan, 2012. "Electricity Consumption, Carbon Emissions and Economic Growth in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 2(4), pages 292-306.
  16. Jacques Loesse ESSO, 2010. "The Energy Consumption-Growth Nexus in Seven Sub-Saharan African Countries," Economics Bulletin, AccessEcon, vol. 30(2), pages 1191-1209.
  17. Philip Kofi Adom, 2011. "Electricity Consumption-Economic Growth Nexus: The Ghanaian Case," International Journal of Energy Economics and Policy, Econjournals, vol. 1(1), pages 18-31, June.
  18. Tang, Chor Foon & Shahbaz, Muhammad, 2011. "Revisiting the Electricity Consumption-Growth Nexus for Portugal: Evidence from a Multivariate Framework Analysis," MPRA Paper 28393, University Library of Munich, Germany.
  19. Altinay, Galip & Karagol, Erdal, 2005. "Electricity consumption and economic growth: Evidence from Turkey," Energy Economics, Elsevier, vol. 27(6), pages 849-856, November.
  20. Ozturk, Ilhan, 2010. "A literature survey on energy-growth nexus," Energy Policy, Elsevier, vol. 38(1), pages 340-349, January.
  21. Esso, Loesse Jacques, 2010. "Threshold cointegration and causality relationship between energy use and growth in seven African countries," Energy Economics, Elsevier, vol. 32(6), pages 1383-1391, November.
  22. Kouakou, Auguste K., 2011. "Economic growth and electricity consumption in Cote d'Ivoire: Evidence from time series analysis," Energy Policy, Elsevier, vol. 39(6), pages 3638-3644, June.
  23. Apergis, Nicholas & Payne, James E., 2011. "A dynamic panel study of economic development and the electricity consumption-growth nexus," Energy Economics, Elsevier, vol. 33(5), pages 770-781, September.
  24. Altinay, Galip & Karagol, Erdal, 2004. "Structural break, unit root, and the causality between energy consumption and GDP in Turkey," Energy Economics, Elsevier, vol. 26(6), pages 985-994, November.

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