Energy import dependence in Madagascar: A decoupling analysis

Franck Ramaharo and Rija Randriamanantena ()
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Rija Randriamanantena: UCM - Université catholique de Madagascar

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Abstract: We analyze Madagascar's structural dependence on energy imports using annual and quarterly data spanning 2007 to 2024. Our methodological framework integrates the Tapio decoupling index, Logarithmic Mean Divisia Index (LMDI) decomposition, Autoregressive Distributed Lag (ARDL) modeling, and Granger causality testing. The results show persistent expansive negative decoupling throughout the sample period, which demonstrates that economic expansion drives a disproportionate rise in energy import volumes relative to GDP growth. The LMDI decomposition reveals a systematic inverse symmetry between price and intensity effects. During periods of low international prices, the economy temporarily improves efficiency, yet these gains prove unsustainable. When prices surge, energy intensity simultaneously increases. This pattern reflects structural rigidity in Madagascar's energy system, as the economy fails to sustain efficiency gains during price shocks and instead reverts to more import-intensive production methods. The ARDL estimates confirm this dependency and yield long-run and short-run GDP elasticities of 1.043 and 1.256, respectively. Granger causality tests support the energy-led growth hypothesis and reveal unidirectional flows from energy prices and imports to economic growth in the long run. In the short run, positive shocks in energy prices cause positive changes in GDP, while negative shocks in energy prices cause negative changes in GDP. Short-run GDP shocks, however, cause fluctuations in energy imports of the opposite sign, providing further evidence of the decoupling status. These empirical findings demonstrate that Madagascar's economy remains locked into a high-dependency trajectory where growth is constrained by external energy market volatility.

Keywords: Madagascar; energy import dependence; energy intensity; energy-led growth hypothesis; Tapio decoupling index; LMDI decomposition (search for similar items in EconPapers)
Date: 2026-02-20
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