Stochastic convergence in per capita energy consumption and its catch-up rate: Evidence from 26 African countries

Lei Pan and Svetlana Maslyuk Escobedo

No 16-17, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: Using annual data from 1971 to 2014, we examine stochastic conditional convergence in per capita energy consumption and its catch-up rate for 26 low income, lower middle income and upper middle income African countries. To do so, we use a battery of conventional panel unit root tests, panel tests that allow for cross-sectional dependence and structural breaks as well as the recently developed univariate RALS-LM unit root test with structural breaks. Although for most countries we find evidence in support of stochastic conditional convergence, we find divergence for four countries including DR Congo, Senegal, Egypt and Botswana. The per capita energy consumption in Africa is growing faster than that of other countries, driven by improved infrastructure and inward investment from China. Over time, as regional energy consumption disparity narrows, we find African countries will catch up to China. This catching up effect will also affect China’s overall energy demand in the future.

Keywords: energy consumption; catch-up rate; stochastic convergence; unit roots; cross-sectional dependence; structural breaks (search for similar items in EconPapers)
JEL-codes: C12 O40 O43 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2017-04
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