Electricity consumption and Economic growth in Botswana: A Vector Error Correction approach

Samuel Chingoiro and Strike Mbulawa

Advances in Management and Applied Economics, 2017, vol. 7, issue 2, 6

Abstract: Emerging economies are still faced with need to improve economic growth. One of the main drivers of growth in literature has been found to be electricity consumption. However literature fails to explain the relationship between economic growth and electricity consumption. It is against this background that the study examines the presence of the long run relationship between economic growth and electricity consumption in Botswana. The study use annual time series data for the period 1980 – 2014. Using the Vector Error Correction Model, the study shows that there is a positive long run relationship between the two variables. Electricity consumption drives long term growth and it is an important input in the country’s production function. Human capital and inflation are important control variables in explaining this long run relationship. Inflationary pressures on the economy should be kept low and human capital development should be industry relevant for the country to advance its growth efforts. Policymakers should continue with and rather develop instruments that encourage more electricity consumption. In this case electricity subsidies should be given to firms in areas that are critical for country’s growth prospects, like mining and agriculture. Policy makers need to make a cost benefit analysis as they design the subsidies to benefit all the targeted economic agents.JEL classification numbers: O11, E31, E24, F43Keywords: Economic Growth, Electricity Consumption, Botswana, Vector errorcorrection model

Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.scienpress.com/Upload/AMAE%2fVol%207_2_6.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spt:admaec:v:7:y:2017:i:2:f:7_2_6

Access Statistics for this article

More articles in Advances in Management and Applied Economics from SCIENPRESS Ltd
Bibliographic data for series maintained by Eleftherios Spyromitros-Xioufis ().