Energy Consumption and Economic Growth: Empirical Evidence from Selected ECOWAS Countries

Abstract

This study examines the long-run impact of energy consumption on economic growth and the causal relationship between the duos in selected member states of the Economic Community of West African States (ECOWAS). Using annual panel data from 1990 to 2024, the study applies panel unit root and cointegration tests to determine the time-series properties of the variables. The Panel Dynamic Ordinary Least Squares (PDOLS) estimator was employed to evaluate the long-run effects of electricity consumption on economic growth, proxied by GDP per capita growth, while controlling for exchange rate, lending interest rate, and inflation. Pairwise Granger causality tests were further used to explore short-run dynamics. The empirical findings indicated that electricity consumption exerts a positive and statistically significant long-run effect on economic growth within the ECOWAS sub-region. However, no significant short-run causality was detected between energy consumption and growth. These results suggest that the economic benefits of improved electricity supply materialize gradually rather than immediately. Diagnostic and stability tests confirm the robustness of the estimated model. The study concludes that sustained investment in electricity infrastructure and regulatory reforms is critical for long-term growth in ECOWAS countries.