مصرف انرژی و رشد اقتصادی: تجربه بازبینی کشورهای آفریقایی

The aim of this paper is to re-examine the causal relationship between energy consumption and economic growth for seventeen African countries in a multivariate framework by including labor and capital as additional variables. We apply the variance decomposition analysis due to Pesaran and Shin [Pesaran M.H. and Shin, Y. Generalised impulse response analysis in linear multivariate models, Economics Letters, 1998; 58; 17–29.] to evaluate how important is the causal impact of energy consumption on economic growth relative to labor and capital. The results of our multivariate modified Granger causality analysis due to Toda and Yamamoto [Toda, H.Y. and Yamamoto, T. Statistical inference in vector autoregressions with possibly integrated process, Journal of Econometrics, 1995; 66; 225–250.] tend to reject the neutrality hypothesis for the energy–income relationship in fifteen out of the seventeen countries. In contrast, results of our variance decomposition analyses show that in eleven out of the seventeen countries, energy is no more than a contributing factor to output growth and not an important one when compared to capital and labor. Labor and capital are the most important factors in output growth in fifteen out of the seventeen countries. However, these results should be interpreted with care as they may not be sufficiently robust enough to support the inference that energy consumption plays a minor role in the economic growth of African countries.

While there are several studies that have investigated the causal relationship between energy consumption and economic growth using a production function framework for developed and some developing countries, such research is conspicuous by its absence for virtually all African countries.1 The research about African countries is almost exclusively based on the bivariate causality model with energy consumption used as the sole factor input. It is against this backdrop that this paper attempts to fill the gap by investigating the inter-temporal causal relationship between energy consumption and economic growth in a production function framework by including labor and capital as intermitting variables. In doing so, the purpose of this paper is to add to the debate by re-examining the causal relationship between energy consumption and economic growth for seventeen African counties by extending the debate in three methodological approaches. First, unlike previous time series studies for African countries where most of these studies were concentrated in a two-variable case, we include capital and labor as additional variables to the energy-growth nexus as energy alone might not be strong enough to spur economic growth. The potential gains to economic growth may depend on the degree to which capital, energy and labor act as complements. By incorporating capital and labor as additional variables, we not only attempt to underline the importance of these two factors of production for economic growth but we can also test the hypothesis that capital and labor promote economic growth or vice versa. Further, we include these two additional variables because exclusion of a relevant variable(s) makes not only the estimates biased as well as inconsistent but also no-causality in a bivariate system can result from neglected variables (Lütkepohl, 1982). Thus the previous bivariate causality tests between energy consumption and economic growth may be invalid due to the omission of important variables affecting both energy consumption and economic growth. It is possible that the introduction of capital and labor in the causality framework may not only alter the direction of causality but also the magnitude of the estimates (Loizides and Vamvoukas, 2005 and Odhiambo, 2008). Further, since a four VAR case incorporates more information than the bivariate case, the causal inference drawn can be more reliable (Loizides and Vamvoukas, 2005). Second, we use a modified version of the Granger causality test proposed by Toda and Yamamoto (1995) where the procedure does not require knowledge of the cointegrating properties of the system and thus avoids the potential bias associated with cointegration tests. Third, as previous empirical evidence for Africa did not attempt to evaluate the strength of their causality findings beyond the sample period, we use innovation accounting or variance decomposition analysis due to Pesaran and Shin (1998), which, unlike the conventional method, is invariant to the order of the variables in which they enter the VAR. By doing so, we can assess how each variable responds to the innovation of other variables in the system and also evaluate how important is the causal impact of energy on economic growth relative to capital and labor (Shan, 2005). The rest of the paper is structured as follows. In Section 2 we make a brief review the empirical literature followed in Section 3 by a short description of the theoretical background. The methodology is outlined in Section 4 while in Section 5 we discuss the empirical evidence. Policy implications of our empirical findings are presented in Section 6 while summary and conclusions are outlined in Section 7.

In this paper attempts were made to re-visit the causal relationship between economic growth and energy consumption in seventeen African countries using a multivariate framework by including labor and capital in the causality analysis. Overall, the result of our multivariate Granger causality analysis tends to reject the neutrality hypothesis for the energy–income relationship in fifteen out of the seventeen African countries under consideration. In the substantial majority of the countries under investigation, the evidence is in line with the growth-led energy consumption hypothesis where causality running from economic growth to energy consumption was detected in Egypt, Ivory Coast, Morocco, Nigeria, Senegal, Sudan, Tunisia and Zambia. The opposite causality running from energy consumption to economic growth was found in Algeria, Benin and South Africa. In contrast, the neutrality hypothesis was supported in Cameroon and Kenya while the feedback hypothesis was supported in Gabon, Ghana, Togo and Zimbabwe. While the neutrality hypothesis was rejected in fifteen out of the seventeen in these counties using a modified version of the Granger causality test, the strength of this causal relationship, as measured by the variance decomposition analysis, reveals that in the substantial majority of African countries under investigation, energy was no more than a minor contributing factor to output growth and certainly not the most important one when compared to capital and labor. Labor and capital were the most important factors in output growth in these countries. The result of the variance decomposition analysis seems to support the view that energy is neutral to aggregate economic activity in many African countries. However, these results should be interpreted with care, as they may not be sufficiently robust enough to support the inference that energy consumption plays a minor role in the economic growth of African countries. The divergent causality results we have found have major implications for energy policy. For countries where we found evidence of a uni-directional causality running from energy consumption to economic growth, reducing energy consumption could lead to a fall in economic growth. Consequently, when any energy conservation measures are undertaken, considerable care should be taken not to adversely affect economic growth. In countries where there was economic growth-led energy consumption, reducing energy consumption may be implemented with little or no adverse effect on economic growth. In contrast, for countries where there was no causality running in any direction between energy consumption and income, reducing energy consumption may not affect income and energy conservation policies may not affect economic growth. On the other hand, where a bi-directional causality between energy consumption and economic growth was found, energy consumption and economic growth complement each other and energy conservation measures may negatively affect economic growth. Irrespective of the low level of energy consumption and the strength of the causal relationship between energy consumption and economic growth found in this paper, the energy challenge facing African countries is daunting. Since in almost all African countries the current energy infrastructure is simply insufficient to promote sustainable economic development, African countries can stimulate economic growth by investing more on energy and by reducing energy inefficacy in the supply and use of energy. Tragically, in Africa, it is not energy scarcity that is the fundamental problem but the lack of “. . . institutions, rules, financing mechanisms, and regulations needed to make markets work in support of energy for sustainable development” (UNDP, 2004). Until these fundamental constraints that are inhibiting the development of an efficient and accessible energy sector are fully addressed, energy supply will still continue to be a major hurdle for the economic and social development of many African countries.