The interaction of energy consumption and economic growth in South Africa: assessment from the bounds testing approach

Abstract

Researchers concur that energy plays a very significant role in the economic growth and development of any country and that increasing access to modernized systems of energy is critical to unlocking enhanced economic and social development in any country. In the light of this, the current article has empirically examined the causal interactions between energy consumption and economic growth in South Africa for the period 1970 to 2015 using the ARDL-bounds testing method. The results show that all the variables were found to be integrated of order one. The empirical results obtained fully support a positive long-run cointegrating relationship between real economic growth and energy consumption in South Africa. The article used trade openness and financial development as control variables in the model. The research found that although there is unidirectional causality running from energy consumption to economic growth in the short-run, there is long-run bidirectional causality between the two variables as indicated by the coefficients of the error correction terms which were found to be negative and significant as predicted by theory. This means that reducing energy consumption adversely affect real economic growth in both the shortand the long-run; thus, South Africa should adopt a more vigorous energy policy.

Comparison between Romania and Sweden Based on Three Dimensions: Environmental Performance, Green Taxation and Economic Growth

“…The multivariate Granger causality estimation based on the ARDL-error correction model (ECM) and the lagged conditions were used to determine short-run, long-run and strong causality among the model [36][37][38][39]. The novelty of this equation consists in introducing two new variables, namely, revenues from environmental taxes, TAX, and greenhouse gas emissions, GGE, unlike the other models that use energy consumption and CO 2 emissions [31,[36][37][38][39]. The equations used in the model for this study can be expressed as a system of equations as follows:…”

The Relation Between Economic Growth and Oil Production in the Gulf Cooperation Countries: Panel Ardl Approach

“…The relationship between energy and economic growth have studied by economists for many years (i.e. Soytas and Sari, 2003;Fuinhas and Marques, 2012;Kalimeris et al, 2014;Sunde, 2018;Ssali et al, 2019). According to findings, energy consumption triggers the economic growth of countries.…”