Do Institutions Moderate the Energy-Growth Affiliation? Evidence from Sub Sahara Africa Countries

Abstract

This paper aims to look into the role of institutional quality in regulating energy and growth affiliation. The countries of Sub-Saharan Africa (SSA) are studied from 1990 to 2019. CSD and SH tests were used to verify cross-sectional dependency and slope homogeneity properties. CIPS and CADF were used to investigate stationarity features. The Westerlund bootstrap cointegration test was used to analyze the long-tenure equilibrium affiliation among the variables and confirm cointegration in the extended period. To examine the long-short term performance between the variables, the CS-ARDL approach is used. To analyze the flow of causation, the study used the DH causality process. The findings reveal that energy has a negative and significant impact on growth. In both terms, industrialization and population have a negative and positive impact on growth, respectively. The DH heterogenous causality study reveals the mixed effect, i.e. one-way causal associations between growth and institutional quality, two-way causal associations between energy and population, and no causation with industrialization. Furthermore, institutional quality as a moderating variable harms growth. To achieve long-period growth, states should expand investment in renewable energy sectors, create well-resourced institutions, and plan for renewable energy development, according to this empirical research.