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

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  • Tafirenyika Sunde

Abstract

The article 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 article found a positive long-run cointegrating relationship between real economic growth and energy consumption in South Africa. In addition, 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 negative and significant as predicted by theory. This means that reducing energy consumption adversely affect real economic growth in both the short- and the long-run; thus, South Africa should adopt a more vigorous energy policy.

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  • Tafirenyika Sunde, 2018. "The interaction of energy consumption and economic growth in South Africa: assessment from the bounds testing approach," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 10(2), pages 170-183.
    • Handle: RePEc:ids:ijsuse:v:10:y:2018:i:2:p:170-183
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    Keywords

    energy consumption; economic growth; financial development; trade openness; ARDL; error-correction model; South Africa.;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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