AN EMPIRICAL INVESTIGATION OF THE CAUSAL RELATIONSHIP BETWEEN ENERGY CONSUMPTION AND ECONOMIC GROWTH IN NIGERIA (1975 – 2004)
AN EMPIRICAL INVESTIGATION OF THE CAUSAL RELATIONSHIP BETWEEN ENERGY CONSUMPTION AND ECONOMIC GROWTH IN NIGERIA (1975 – 2004)
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Date
2007-02
Authors
AARON, IYOHA OGBEIDE
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Abstract
ABSTRACT
This thesis investigated the causal relationship between energy
consumption and economic growth in Nigeria (1975-2004). This study was
inspired from the series of contradictions obtained in the literatures as
regards the possibility of energy consumption and economic growth to have
a relationship. This thesis investigated whether it is energy consumption that
causes growth or economic growth that causes energy consumption in
Nigeria.
The methodology adopted for the study was the use of Granger
causality test statistics to test for the causal relationship between economic
growth and energy consumption in Nigeria. Sequel to that, a trend analysis
was carried out. The trend parameter (R2) was used to determine the
magnitude of energy consumption and the trend strength of the energy
consumption variable within the study period.
Based on the results of the findings, the Granger statistical f value
obtained was 10.2 which are greater than the f critical value of 4.2 at lag 2.
This result was significant at 5 percent probability level. This result rejected
the null hypothesis and accepted the alternate hypothesis that Economic
growth Granger causes energy consumption in Nigeria.
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This one-way causality may be explained by the nature of the
production structure of Nigeria which is dominated by services and
agricultural activities that are less energy intensive. Sequel to this, the level
of industrialization that demands more energy resources is still very low and
as such energy consumption at this stage may not be able to make any
significant impact to the growth of the Nigeria economy.
The result of the trend analysis showed that there was a strong
positive upward movement in the consumption of the different energy types
in Nigeria except for coal that showed a downward trend. The trend
parameter R2 for energy consumption in the pre-SAP period was 67 percent
while it was 70 percent for the post-SAP period.
The study therefore recommended that all efforts must be geared
towards the attainment of the overall growth of the economy. Investment
opportunity must be enhanced on a level playing ground, the private sector
particularly the banking sector should be encouraged to invest into the real
sector of the economy rather than just commercial activities. This will go a
long way in repositioning the Nigerian economy while boosting energy
consumption and production in the country. This is with the view of
attaining sustainable development.
Description
A THESIS SUBMITTED TO THE POSTGRADUATE SCHOOL, IN
PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
AWARD OF THE DEGREE OF MASTERS OF SCIENCE IN
ECONOMICS
DEPARTMENT OF ECONOMICS
FACULTY OF SOCIAL SCIENCES
AHMADU BELLO UNIVERSITY
ZARIA.
Keywords
EMPIRICAL,, INVESTIGATION,, CAUSAL,, RELATIONSHIP,, ENERGY,, CONSUMPTION,, ECONOMIC,, GROWTH,, NIGERIA,