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Asymmetric impacts of the determinants of energy intensity in Nigeria

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  • Adom, Philip Kofi

Abstract

This study analysed the problem of energy intensity determinants in Nigeria based on the fully modified OLS and canonical cointegration regressions. These methods were preferred since they are able to deal effectively with the second-order bias problems, an often characteristics of time series data. The impacts of price of crude oil, FDI, trade openness and industry structure are asymmetric which suggests the presence of structural effects in parameters. The impact of crude oil price is negative but becomes stronger post-1989 saving .126% more in energy consumption relative to pre-1989. Also, the impacts of FDI and trade openness are negative and significant but become stronger post-1989 saving 11.2% and 0.8% more in energy consumption relative to the baseline, respectively for every one percentage point increase in FDI and trade openness. The impact of industry value-added is positive and significant but weakens after 1989 consuming 1.8% less in energy for every one percentage point increase in industry value-added relative to the baseline. The energy reducing effect of industry value-added post-1989 reflects improvements in the technical characteristics of industrial sector in Nigeria. Last, the result showed that the absorptive capability and industry characteristics of Nigeria are important determinants of how FDI affects energy intensity. This implies that a more integrated FDI programme (considering the country characteristics) rather than a ‘one-fit-all’ programme is preferable.

Suggested Citation

  • Adom, Philip Kofi, 2015. "Asymmetric impacts of the determinants of energy intensity in Nigeria," Energy Economics, Elsevier, vol. 49(C), pages 570-580.
    • Handle: RePEc:eee:eneeco:v:49:y:2015:i:c:p:570-580
    DOI: 10.1016/j.eneco.2015.03.027
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    More about this item

    Keywords

    Energy intensity; Asymmetric effects; Absorptive capability; Nigeria;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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