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Energy consumption efficiency in Sub- Saharan Africa: evidence and policies
Author(s):Solomon Aboagye* and Paul Alagidede#
soaboagye@ug.edu.gh / sbaboagye@gmail.com
2024-08-01 06:33:59
48 Downloads 97 Views
Abstract
Energy-based inputs continue to feature prominently in all economic activities and the linkages between energy inputs and economic expansion has received considerable attention in the literature. The aftermath of the oil price shocks in the 1970s coupled with the unreliable and insufficient supply of energy resources has spurred a great shift of emphasis from mere energy consumption to a thorough investigation into efficient consumption or utilization of energy-based resources and the factors underlying the behaviour of energy intensity. This quest is particularly important against the evidence that in many Sub Saharan African (SSA) countries, energy supply has not only been very insufficient to meet the every growing demand but has also been uncertain and unreliable. In addition, since every growth process requires some energy consumption, it is vital that energy resources are consumed in more efficient manner given that shortages could threaten the sustainable development of an economy. Using the system Generalized Method of Moments analysis on a panel dataset for 36 SSA countries over the period 1980-2015, this study examines how some key macroeconomic parameters explain the observed rising trend in energy intensity in SSA. It is established among others that, energy consumption efficiency is a function of the extent of openness of an economy to external commerce and domestic price developments. In particular, greater openness to trade and higher domestic prices tend to reduce energy intensity. Further, the results show that while the industrial and services sectors have adverse effect on energy consumption efficiency, the reverse is true for the agricultural sector. We discuss some policy options.
Keywords
Energy consumption efficiency, macroeconomy, foreign direct investment, trade openness, disaggregated growth, income
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