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Impact of Energy Consumption on Industrial Growth in a Transition Economy: Evidence from Nigeria

Kassim, Fatima and Isik, Abdurrahman (2020): Impact of Energy Consumption on Industrial Growth in a Transition Economy: Evidence from Nigeria.

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Abstract

This research investigates the impact of energy consumption on industrial growth. Variables used are; manufacturing vale added (dependent variable, electricity consumption, per capita income, exchange rate, import, and export by using yearly time series data from 1985 through 2017 in Nigeria. The OLS method of egression was used to estimate the equation in the period under review. Unit root test, Co-integration test and Granger causality were carried out to test for stationarity, long run relationship, and causal relationship, respectively. Results show a negative and insignificant relationship between electricity consumption and industrial growth. The unit root test shows that all variables are integrated of order one except for the exchange rate, which is stationary at level. The Co-integration test indicates that there exists the presence of long-run relationships. The granger causality indicates the growth hypothesis from industries in Nigeria. Generally, this paper stresses the dangers of inadequate electricity supply in the functioning of industries and businesses, which further worsens overall growth in the Nigerian economy.

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