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Relationship Between Electricity Consumption, Manufacturing Output and Financial Development: A New Evidence from Nigeria

Author

Listed:
  • Saifullahi Sani Ibrahim

    (Department of Economics and Development Studies, Federal University Dutsin-ma, Nigeria)

  • Shuaibu Mukhtar

    (Department of Social Sciences, Kebbi State Polytechnic, Dakingari, Nigeria)

  • Ibrahim Musa Gani

    (Department of Economics ,Isa Kaita College of Education, Dutsin-ma, Nigeria)

Abstract

Electricity is regarded as sine quo non for any meaningful social, economic and modern scientific advancement of any country in the world. It is regarded as a force and engine room of the industrial sector. However, in Nigeria, instability in power supply is negatively affecting manufacturing efficiency. Time series data for 1981 until 2015 was used to examine the symmetric relationship between the electric consumption, manufacturing output and financial development in Nigeria.? The result indicates the co-movement in the variable over long time horizon, meaning that any inefficiency in electricity supply would impedes industrial output. Moreover, the Granger causality test based on vector error correction framework shows the presence of causality between power utilization of manufacturing firms and economic growth without feedback. In this sense it can be stress that stable electricity consumption is important factor for Nigeria?s manufacturing sector. The result of variance decomposition further indicates that the variation in the industrial output responds more to shocks in the electricity supply than its own shock. This finding suggests that energy is the engine of manufacturing sector in Nigeria.

Suggested Citation

  • Saifullahi Sani Ibrahim & Shuaibu Mukhtar & Ibrahim Musa Gani, 2017. "Relationship Between Electricity Consumption, Manufacturing Output and Financial Development: A New Evidence from Nigeria," Energy Economics Letters, Asian Economic and Social Society, vol. 4(3), pages 28-35, September.
  • Handle: RePEc:asi:eneclt:2017:p:28-35
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    References listed on IDEAS

    as
    1. MacKinnon, James G & Haug, Alfred A & Michelis, Leo, 1999. "Numerical Distribution Functions of Likelihood Ratio Tests for Cointegration," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(5), pages 563-577, Sept.-Oct.
    2. Sani Ibrahim, Saifullahi & Tanimu, Nuruddeen, 2015. "The Linkages between Trade Openness, Financial Openness and Economic Growth in Nigeria," MPRA Paper 87494, University Library of Munich, Germany, revised 06 Aug 2016.
    3. Adeola Adenikinju, 2005. "Analysis of the cost of infrastructure failures in a developing economy: The case of the electricity sector in Nigeria," Research Papers RP_148, African Economic Research Consortium.
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    Cited by:

    1. Ouarda Belkacem Layachi, 2019. "Effects of Energy Prices on Environmental Pollution: Testing Environmental Kuznets Curve for Algeria," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 401-408.

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