Energy and Economic Development in Nigeria: An Econometric Approach based on Fractional Integration

Abstract

The relationship between economic development and energy in Nigeria is examined in this work. An econometric model is developed to ccount for the factors affecting economic growth and development in the country. The results show that the variables have long memory and all except electricity consumption are non-mean reverting. The series are heterogeneous with respect to the order of integration. Using OLS regressions with fractionally integrated errors, we found that electricity consumption, oil prices, electricity prices, real interest rate and employment affect GDP per capita with only real interest rate having a negative relationship. Policy recommendations are proposed in the article.