Dynamics of the Natural Gas Industry and Economic Growth in Mozambique

Abstract

This paper investigates dynamics of the natural gas industry and economic growth in Mozambique for the period of 1999 to 2015. Times series data is collected from Index Mundi, produced by World Bank and it includes export and labor. This study employs Error Correction model. Results report that the natural gas industry, export, and labor are positively cointegrated with economic growth, and they have a long-run relationship. In a short-run term, results revealed that the natural gas industry has a positive effect and it is significant to influence economic growth in Mozambique. However, on the other hand, export and labor contribution to economic growth is small. The study recommends that government should implement a growth policy for the natural gas industry because it would stimulate economic growth. In Mozambique, the natural gas industry will experience foremost dynamics with the production of natural gas in Rovuma Basin scheduled to start by 2022, and it will play a great role to promote the economic growth in the upcoming future.