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Income Level and the Energy Consumption-GDP Nexus: Evidence from Sub-Saharan Africa

Author

Listed:
  • Mulugeta Kahsai

    (Virginia State University Department of Technology)

  • Chali Nondo

    (Division of Resource Management, West Virginia University)

  • Peter Schaeffer

    (Division of Resource Management, West Virginia University)

  • Tesfa Gebremedhin

    (Division of Resource Management, West Virginia University)

Abstract

This study tests the relationship between energy consumption and economic growth in Sub-Saharan Africa, using a panel co-integration approach. Country-level time series data of energy consumption and economic growth are pooled and used to estimate the model. Sub-Saharan African countries in the sample are classified into low income and middle income countries. The findings support the neutrality hypothesis in the short-run, except for middle income countries, and a strong causation running in both directions is found in the long-run. The different results for low and middle income countries provide evidence of the importance of income level in the causal relationship. This study helps to explain the interdependence of energy consumption and economic growth in Sub-Saharan Africa. Results are critical in formulating sustainable development policies that are geared to the efficient allocation of resources which are expected to increase access to energy services in the study region.

Suggested Citation

  • Mulugeta Kahsai & Chali Nondo & Peter Schaeffer & Tesfa Gebremedhin, 2010. "Income Level and the Energy Consumption-GDP Nexus: Evidence from Sub-Saharan Africa," Working Papers Research Paper 2010-07, Regional Research Institute, West Virginia University.
    • Handle: RePEc:rri:wpaper:2010rp07
    DOI: 10.1016/j.eneco.2011.06.006
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    Keywords

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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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