Trivariate modelling of the nexus between electricity consumption, urbanization and economic growth in Nigeria: fresh insights from Maki Cointegration and causality tests

Abstract

In this era of intensive electricity utilization for economic development, the role of urbanization remains inconclusive, especially in developing economies. Here, this study examined the electricity consumption and economic growth nexus in a trivariate framework by incorporating urbanization as an additional variable. Using the recent novel Maki cointegration test, Ng-Perron, Zivot-Andrews, and Kwiatkowski unit root tests along with FMOLS, DOLS and the CCR estimation methods, we relied on an annual frequency data from 1971-2014. Results from FMOLS, DOLS and the CCR regression confirms the electricity consumption-driven economic growth. This is desirable as Nigeria is heavily dependent on energy (electricity) consumption. A unidirectional causality from urbanization to electricity consumption and economic growth was found but the long-run empirical findings revealed urbanization impedes growtha situation that has policy implications. The study highlights that though urbanization is a good predictor of Nigeria's economic growth, however, the adjustment of the energy portfolio to meet the growing urban demand will curtail the adverse and far-reaching impact of urbanization on the economy.

Symmetric and Asymmetric Impact of Poverty, Income Inequality, and Population on Carbon Emission in Pakistan: New Evidence From ARDL and NARDL Co-Integration

“…As reported in Tables 7, 8, the result of ARDL methodology show that there is a positive and statistically significant relationship between GDP per capita and environmental degradation in case of Pakistan, thus signifying that the GDP per capita rises CO 2 e in the short-run as well as in the long-run. Particularly, the findings of this study are comparable with the work of Adedoyin et al (2020) for BRICS economies, Ali et al (2020) for Nigeria, Khan (2019) for ASEAN countries, Malik et al (2020) for Pakistan, Lu (2017) for developing countries, Usman et al (2020) for upper middle income countries (UMICs), and Zhang et al (2014) for China. From the empirical results of this study, we are able to conclude that the existing economic growth and economic activities in developing countries like Pakistan contribute to the reduction of extreme poverty but with high environmental costs in the shape of environmental degradation.…”

Can CO2 emissions and energy consumption determine the economic performance of South Korea? A time series analysis

“…Nguyen and Nguyen (2018) found that urbanization positively affects GDP in the ASEAN countries. Ali et al (2020a) examined the association between urbanization and GDP using the Maki cointegration test, FMOLS, DOLS, CCR, and VECM Granger causality covering the period from 1971 to 2014.…”

Nexus between energy consumption, information and communications technology, and economic growth: An enquiry into emerging Asian countries

“…Additionally, With respect to electricity consumption, Mezghani and Haddad (2017) attempt to explore the interrelationship of Saudi Arabian real GDP (oil, nonoil), electricity consumption, and CO 2 emissions levels by employing the Time‐Varying Parameters Vector Autoregressive model with stochastic volatility and indicate that the variations in the volatility of oil GDP levels positively impact CO 2 emissions and electricity consumption. Additionally, Ali, Nathaniel, Uzuner, Bekun, and Sarkodie (2020) and Nathaniel and Bekun (2020) explore the nexus between electricity consumption, urbanization, and economic growth in Nigeria, and highlight the need for policies to ensure efficient electricity supply to promote sustainable economic growth. Additionally, with specific reference to the environment in Nigeria, Nathaniel (2019) also explores the link between urbanization, trade flow, energy consumption, and economic growth, and suggests policies for energy and poverty, for enhanced sustainable growth.…”