The Causal Relationship Between Electricity Supply and Economic Growth in South Africa

Impact of Rural and Urban Electricity Access on Economic Growth in Zimbabwe

“…Studies that have examined limited countries continue to emerge as opposed to panel studies and these studies include earlier research by Masih and Masih (1998), Chandran et al (2010), Odhiambo (2010) and Khobai et al (2017). Masih and Masih (1996) and Chandran et al (2010) adopted the Vector Error Correction Model (VECM) and ARDL models for analysis of Thailand, Sri Lanka and Malaysia respectively.…”

“…Moreover, within the Democratic Republic of Congo (DRC), energy consumption was found to have a causal effect on prices in the short run and pricing to growth relationship in the long run. Khobai et al (2017) examined the relationship between, electricity supply, electricity price and growth using ARDL model and found that electricity prices negatively affect growth whilst the supply thereof was positive. Thus, increased prices regardless of access could lead to negative growth rendering supply within affordability levels critical.…”

A Sectoral Approach to the Electricity-Growth Nexus in the Eastern Cape Province of South Africa

“…By default, only the studies of Dlamini et al (2015) and Moele and Ncanywa (2018) advocate for the neutrality hypothesis in South Africa. On the other hand, the feedback hypothesis receives the most empirical support in the literature (Odhiambo (2009), Khobai et al (2017) and Nyoni and Phiri (2018)), whilst the conservation hypothesis (Bildirici et al, 2012) and the growth hypothesis (Menyah and Wolde-Rufael, 2010) receive less empirical support. All-in-all, it is safe to assume that there exists no consensus on the electricity-growth nexus for South Africa and the literature is heterogenous.…”

“…To the very best of our search efforts, we are able to find 10 studies, a majority which have used ARDL or VECM cointegration models (Odhiambo (2009), Menyah and Wolde-Rufael ( 2010), Bildirici et al (2012), Dlamini et al (2015), Nyoni and Phiori (2016), Khobai et al (2017) and Moele and Ncanywa (2018)) whilst the remaining studies use nonlinear cointegration methods (Nyoni and Phiri, 2018) or various causality tests (Dlamini et al (2015) and Bah and Azam (2017)). Out of these 10 studies, 8 studies show a positive cointegration relationship (Odhiambo (2009), Menyah and Wolde-Rufael (2010), Bildirici et al (2012), Nyoni and Phiri (2016), Bah and Azam (2017), Khobai et al (2017) and Nyoni and Phiri (2018)) whereas the remaining two studies establish no such relationship (Dlamini et al (2015) and Moele and Ncanywa (2018)). By default, only the studies of Dlamini et al (2015) and Moele and Ncanywa (2018) advocate for the neutrality hypothesis in South Africa.…”

“…There is much concern surrounding these scheduled nation-wide "blackout" periods as it is widely believed that this forced reduction in electricity usage will more significantly affect poorer regions of the country as people in these less fortunate areas are not afforded access to alternative sources of energy in sustaining their livelihood. From an academic perspective, a number of authors have provided evidence of electricity consumption being an important contributor to economic growth in South Africa hence providing evidence against electricity conservation policies (Odhiambo (2009), Menyah and Wolde-Rufael (2010), Bildirici et al (2012), Nyoni and Phiri (2016;2018), Khobai et al (2017), Bah and Azam (2017) and Nyoni and Phiri (2018)). Nevertheless, these studies are based on nation-wide time series data that do not recognize possible heterogeneity effects arising from economic disparities between different regions or provinces within a country.…”