Electricity Consumption and Economic Growth: Trivariate investigation in Botswana with Capital Formation


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  • Sakiru Adebola Solarin Universiti Utara, Malaysia

Abstract

This study investigates the relationship between electricity consumption and real gross domestic product in Botswana (the world’s largest producer of diamonds). The study includes capital formation in a trivariate system for the period covering 1980-2008. Zivot and Andrews (1992) unit roots test; bound test for cointegration, and Granger causality test are employed. Unidirectional causality is found from electricity consumption to real gross domestic product is in line with study of Altinay and Karagol (2005) among others. The long run estimate reinforce the Granger causality tests by indicating that electricity consumption is positively associated with real gross domestic product in the long run. Further findings suggest unidirectional causality from capital formation to real gross domestic product. The implication is that Botswana- being a highly energy dependent country- will have the performance of its capital formation on the economy partly determined by adequate electricity.Keywords: Economic growth; Electricity consumption; Bound test; Causality; Structural break; BotswanaJEL Classifications: Q43; C32; O55

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Author Biography

Sakiru Adebola Solarin, Universiti Utara, Malaysia

PhD research candidate at the Universiti Utara, Malaysia

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Published

2011-08-06

How to Cite

Solarin, S. A. (2011). Electricity Consumption and Economic Growth: Trivariate investigation in Botswana with Capital Formation. International Journal of Energy Economics and Policy, 1(2), 32–46. Retrieved from https://econjournals.com/index.php/ijeep/article/view/27

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