The Relationship between Electricity Consumption, Foreign Direct Investment and Economic Growth: Case of Benin

Desire Wade Atchike, Zhen-Yu Zhao, Geriletu Bao


Using the autoregressive distributed lag (ARDL) bounds test with dummy variables and the Toda-Yamamoto approach; this paper investigated the relationship between electricity consumption, foreign direct investment and economic growth in Benin for the period of 1980-2014. Confirming the growth theory for Benin, the results show evidence of unidirectional causalities from electricity consumption to both economic development and foreign direct investment and a long run relationship with a speed of adjustment of 60.72%. These findings suggest that the government of Benin should target the implementation of new strategies to improve access to electricity in order to attract more foreign investment and achieve a rapid and sustainable economic growth.

Keywords:  Electricity Consumption, Foreign Direct Investment, Economic Growth, Benin.

JEL Classifications: F21, F43, Q43.


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