IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v193y2024ics030142152400291x.html
   My bibliography  Save this article

Industrialisation in Africa: The role of energy transition

Author

Listed:
  • Ongo Nkoa, Bruno Emmanuel
  • Fonguen-Kong-Ngoh, Arnaud Barnabé

Abstract

As Africa increasingly turns to renewable and sustainable energy sources to meet its growing energy needs, this study investigates the economic implications of this shift by taking into account both the primary (fossil fuel-based) and secondary (renewable energy-based) energy transitions. Applying the instrumental variables method with fixed and random effects to a panel of 25 countries over the period from 2000 to 2021, we show that consumption of fossil and renewable energies has a positive effect on industrial sector's value added. However, this result is not identical for the countries of West Africa, where the use of renewable energy has a negative effect on industrialisation, or in Central Africa, where the effect is not significant. However, the overall positive effect of two forms of energy transition is robust to the use of technological, economic and institutional determinants, as well as to the use of Quantile Moment (QM) estimator. fossil fuels and renewable energies has virtuous effects on industrialisation. However, the effect of renewable energies is greater and makes it possible to achieve the dual objective of industrialisation and environmental preservation. We therefore recommend Establish an ambitious, multi-stakeholder international financing framework dedicated to energy transition and green industrialisation.

Suggested Citation

  • Ongo Nkoa, Bruno Emmanuel & Fonguen-Kong-Ngoh, Arnaud Barnabé, 2024. "Industrialisation in Africa: The role of energy transition," Energy Policy, Elsevier, vol. 193(C).
  • Handle: RePEc:eee:enepol:v:193:y:2024:i:c:s030142152400291x
    DOI: 10.1016/j.enpol.2024.114271
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S030142152400291X
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.enpol.2024.114271?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Karanfil, Fatih, 2008. "Energy consumption and economic growth revisited: Does the size of unrecorded economy matter?," Energy Policy, Elsevier, vol. 36(8), pages 3019-3025, August.
    2. Zaib Maroof & Shahzad Hussain & Muhammad Jawad & Munazza Naz, 2019. "Determinants of industrial development: a panel analysis of South Asian economies," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(3), pages 1391-1419, May.
    3. Payne, James E., 2009. "On the dynamics of energy consumption and output in the US," Applied Energy, Elsevier, vol. 86(4), pages 575-577, April.
    4. Zhang, Xing-Ping & Cheng, Xiao-Mei, 2009. "Energy consumption, carbon emissions, and economic growth in China," Ecological Economics, Elsevier, vol. 68(10), pages 2706-2712, August.
    5. Paul, Shyamal & Bhattacharya, Rabindra N., 2004. "Causality between energy consumption and economic growth in India: a note on conflicting results," Energy Economics, Elsevier, vol. 26(6), pages 977-983, November.
    6. Taryn Dinkelman, 2011. "The Effects of Rural Electrification on Employment: New Evidence from South Africa," American Economic Review, American Economic Association, vol. 101(7), pages 3078-3108, December.
    7. Ebenezer Megbowon & Courage Mlambo & Babatunde Adekunle, 2019. "Impact of china’s outward fdi on sub-saharan africa’s industrialization: Evidence from 26 countries," Cogent Economics & Finance, Taylor & Francis Journals, vol. 7(1), pages 1681054-168, January.
    8. Machado, José A.F. & Santos Silva, J.M.C., 2019. "Quantiles via moments," Journal of Econometrics, Elsevier, vol. 213(1), pages 145-173.
    9. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    10. Anne Le Brun & Susan R. Helper & David I. Levine, 2011. "The Effect of Industrialization on Children’s Education. The Experience of Mexico," Review of Economics and Institutions, Università di Perugia, vol. 2(2).
    11. Ghali, Khalifa H. & El-Sakka, M. I. T., 2004. "Energy use and output growth in Canada: a multivariate cointegration analysis," Energy Economics, Elsevier, vol. 26(2), pages 225-238, March.
    12. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    13. Lee, Chien-Chiang, 2005. "Energy consumption and GDP in developing countries: A cointegrated panel analysis," Energy Economics, Elsevier, vol. 27(3), pages 415-427, May.
    14. Gaggl, Paul & Gray, Rowena & Marinescu, Ioana & Morin, Miguel, 2021. "Does electricity drive structural transformation? Evidence from the United States," Labour Economics, Elsevier, vol. 68(C).
    15. Burke, Paul J. & Dundas, Guy, 2015. "Female Labor Force Participation and Household Dependence on Biomass Energy: Evidence from National Longitudinal Data," World Development, Elsevier, vol. 67(C), pages 424-437.
    16. Fouquet, Roger, 2010. "The slow search for solutions: Lessons from historical energy transitions by sector and service," Energy Policy, Elsevier, vol. 38(11), pages 6586-6596, November.
    17. Erdal, Gülistan & Erdal, Hilmi & Esengün, Kemal, 2008. "The causality between energy consumption and economic growth in Turkey," Energy Policy, Elsevier, vol. 36(10), pages 3838-3842, October.
    18. Haitao Wu & Ruohan Zhong & Zhen Wang & Yuanfeng Qu & Xiaodong Yang & Yu Hao, 2024. "How Does Industrial Intellectualization Affect Energy Intensity? Evidence from China," The Energy Journal, , vol. 45(2), pages 49-70, March.
    19. Guadagno, Francesca, 2016. "The determinanths of industrialisation in developing countries, 1960-2005," MERIT Working Papers 2016-031, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    20. Mkandawire, Thandika, 2001. "Thinking about Developmental States in Africa," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 25(3), pages 289-313, May.
    21. Stern, David I., 2000. "A multivariate cointegration analysis of the role of energy in the US macroeconomy," Energy Economics, Elsevier, vol. 22(2), pages 267-283, April.
    22. Djeunankan, Ronald & Tadadjeu, Sosson & Kamguia, Brice, 2024. "Linking energy poverty and industrialization: Empirical evidence from African countries," Energy, Elsevier, vol. 292(C).
    23. Baltagi, Badi H. & Liu, Long, 2009. "A note on the application of EC2SLS and EC3SLS estimators in panel data models," Statistics & Probability Letters, Elsevier, vol. 79(20), pages 2189-2192, October.
    24. Costantini, Valeria & Crespi, Francesco & Paglialunga, Elena, 2018. "The employment impact of private and public actions for energy efficiency: Evidence from European industries," Energy Policy, Elsevier, vol. 119(C), pages 250-267.
    25. Kassem, Dana, 2024. "Does electrification cause industrial development? Grid expansion and firm turnover in Indonesia," Journal of Development Economics, Elsevier, vol. 167(C).
    26. Wolde-Rufael, Yemane, 2004. "Disaggregated industrial energy consumption and GDP: the case of Shanghai, 1952-1999," Energy Economics, Elsevier, vol. 26(1), pages 69-75, January.
    27. Juma, Calestous, 2016. "Innovation and Its Enemies: Why People Resist New Technologies," OUP Catalogue, Oxford University Press, number 9780190467036.
    28. Jason Hickel & Giorgos Kallis, 2020. "Is Green Growth Possible?," New Political Economy, Taylor & Francis Journals, vol. 25(4), pages 469-486, June.
    29. Tiago Lopes Afonso & António Cardoso Marques & José Alberto Fuinhas, 2021. "Does energy efficiency and trade openness matter for energy transition? Empirical evidence for countries in the Organization for Economic Co-operation and Development," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(9), pages 13569-13589, September.
    30. D’Alisa, Giacomo & Kallis, Giorgos, 2020. "Degrowth and the State," Ecological Economics, Elsevier, vol. 169(C).
    31. Wang, Rongji & Laila, Ume & Nazir, Rabia & Hao, Xibin, 2023. "Unleashing the influence of industrialization and trade openness on renewable energy intensity using path model analysis: A roadmap towards sustainable development," Renewable Energy, Elsevier, vol. 202(C), pages 280-288.
    32. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    33. World Bank, 2021. "World Development Report 2021 [Informe sobre el desarrollo mundial 2021]," World Bank Publications - Books, The World Bank Group, number 35218.
    34. Fried, Stephie & Lagakos, David, 2021. "Rural electrification, migration and structural transformation: Evidence from Ethiopia," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    35. Gallaway, Lowell E & Shukla, Vishwa, 1974. "The Neoclassical Production Function," American Economic Review, American Economic Association, vol. 64(3), pages 348-358, June.
    36. Eric Evans Osei Opoku & Isabel Kit-Ming Yan, 2019. "Industrialization as driver of sustainable economic growth in Africa," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(1), pages 30-56, January.
    37. Davis, Lance & North, Douglass, 1970. "Institutional Change and American Economic Growth: A First Step Towards a Theory of Institutional Innovation," The Journal of Economic History, Cambridge University Press, vol. 30(1), pages 131-149, March.
    38. Saumik Paul & Vengadeshvaran Sarma, 2013. "The Livelihood Effects of Industrialization on Displaced Households: Evidence from Falta Special Economic Zone," Discussion Papers 13/09, University of Nottingham, CREDIT.
    39. Yu-Hsien Lin & Yu-Shan Chen, 2017. "Determinants of green competitive advantage: the roles of green knowledge sharing, green dynamic capabilities, and green service innovation," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(4), pages 1663-1685, July.
    40. Belloumi, Mounir, 2009. "Energy consumption and GDP in Tunisia: Cointegration and causality analysis," Energy Policy, Elsevier, vol. 37(7), pages 2745-2753, July.
    41. Oh, Wankeun & Lee, Kihoon, 2004. "Causal relationship between energy consumption and GDP revisited: the case of Korea 1970-1999," Energy Economics, Elsevier, vol. 26(1), pages 51-59, January.
    42. Mulugetta, Yacob & Urban, Frauke, 2010. "Deliberating on low carbon development," Energy Policy, Elsevier, vol. 38(12), pages 7546-7549, December.
    43. Paul, Saumik & Sarma, Vengadeshvaran, 2013. "The livelihood effects of industrialization on displaced households: Evidence from falta special economic zone, West Bengal," ZEW Discussion Papers 13-083, ZEW - Leibniz Centre for European Economic Research.
    44. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    45. Balestra, Pietro & Varadharajan-Krishnakumar, Jayalakshmi, 1987. "Full Information Estimations of a System of Simultaneous Equations with Error Component Structure," Econometric Theory, Cambridge University Press, vol. 3(2), pages 223-246, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cosimo Magazzino, 2015. "Energy consumption and GDP in Italy: cointegration and causality analysis," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 17(1), pages 137-153, February.
    2. Ozturk, Ilhan, 2010. "A literature survey on energy-growth nexus," Energy Policy, Elsevier, vol. 38(1), pages 340-349, January.
    3. Sofien, Tiba & Omri, Anis, 2016. "Literature survey on the relationships between energy variables, environment and economic growth," MPRA Paper 82555, University Library of Munich, Germany, revised 14 Sep 2016.
    4. Farzana Sharmin & Mohammed Robayet Khan & Mohammed Robayet Khan, 2016. "A Causal Relationship between Energy Consumption, Energy Prices and Economic Growth in Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 6(3), pages 477-494.
    5. Omri, Anis, 2014. "An international literature survey on energy-economic growth nexus: Evidence from country-specific studies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 951-959.
    6. Waseem Ahmad & Tanvir Ahmed, 2014. "Energy Sources and Gross Domestic Product: International Evidence," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 53(4), pages 477-490.
    7. Magazzino, Cosimo, 2011. "Energy consumption and aggregate income in Italy: cointegration and causality analysis," MPRA Paper 28494, University Library of Munich, Germany.
    8. Tiba, Sofien & Omri, Anis, 2017. "Literature survey on the relationships between energy, environment and economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 1129-1146.
    9. Ajmi, Ahdi Noomen & El Montasser, Ghassen & Nguyen, Duc Khuong, 2013. "Testing the relationships between energy consumption and income in G7 countries with nonlinear causality tests," Economic Modelling, Elsevier, vol. 35(C), pages 126-133.
    10. Omay, Tolga & Hasanov, Mübariz & Uçar, Nuri, 2014. "Energy consumption and economic growth: Evidence from nonlinear panel cointegration and causality tests," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 34(2), pages 36-55.
    11. Hatemi-J, Abdulnasser & Uddin, Gazi Salah, 2012. "Is the causal nexus of energy utilization and economic growth asymmetric in the US?," Economic Systems, Elsevier, vol. 36(3), pages 461-469.
    12. Araç, Ayşen & Hasanov, Mübariz, 2014. "Asymmetries in the dynamic interrelationship between energy consumption and economic growth: Evidence from Turkey," Energy Economics, Elsevier, vol. 44(C), pages 259-269.
    13. Jalil, Abdul, 2014. "Energy–growth conundrum in energy exporting and importing countries: Evidence from heterogeneous panel methods robust to cross-sectional dependence," Energy Economics, Elsevier, vol. 44(C), pages 314-324.
    14. Bilgili, Faik & Doğan, İbrahim & H. Tülüce, Nadide & Kuşkaya, Sevda, 2014. "The impact of biomass, geothermal and hydroelectric energy consumption on industrial production: A threshold cointegration model with regime shifts," MPRA Paper 90168, University Library of Munich, Germany.
    15. Shahateet, Mohammed Issa & Al-Majali, Khalid Ali & Al-Hahabashneh, Fedel, 2014. "Causality and Cointegration between Economic Growth and Energy Consumption: Econometric Evidence from Jordan," MPRA Paper 59067, University Library of Munich, Germany, revised Oct 2014.
    16. Nasir, Muhammad & Ur Rehman, Faiz, 2011. "Environmental Kuznets Curve for carbon emissions in Pakistan: An empirical investigation," Energy Policy, Elsevier, vol. 39(3), pages 1857-1864, March.
    17. Alkhathlan, Khalid & Javid, Muhammad, 2013. "Energy consumption, carbon emissions and economic growth in Saudi Arabia: An aggregate and disaggregate analysis," Energy Policy, Elsevier, vol. 62(C), pages 1525-1532.
    18. Stephan B. Bruns & Christian Gross & David I. Stern, 2014. "Is There Really Granger Causality between Energy Use and Output?," The Energy Journal, , vol. 35(4), pages 101-134, October.
    19. Chang, Ching-Chih & Soruco Carballo, Claudia Fabiola, 2011. "Energy conservation and sustainable economic growth: The case of Latin America and the Caribbean," Energy Policy, Elsevier, vol. 39(7), pages 4215-4221, July.
    20. Zhihui Lv & Amanda M. Y. Chu & Michael McAleer & Wing-Keung Wong, 2019. "Modelling Economic Growth, Carbon Emissions, and Fossil Fuel Consumption in China: Cointegration and Multivariate Causality," IJERPH, MDPI, vol. 16(21), pages 1-35, October.

    More about this item

    Keywords

    Energy transition; Industrialisation; Instrumental variables; Quantile moments;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:193:y:2024:i:c:s030142152400291x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.