Economic consequences of disaggregate energy consumption in West African Countries

Abstract

Using the data over the period 1971-2010 and employing Dynamic Ordinary Least Squares for Cointegrated Panel Data with homogeneous long-run covariance structure across cross-sectional units, this paper assesses the costs of disaggregate energy consumption on the growth of output and of its components in eight selected West African Countries. The results show that fossil fuel consumption affects industry and agriculture negatively and positively affects per capita output growth, with none of the results statistically significant. There is positive relationship between electricity consumption and industry with statistically significant result. However, there is negative relationship between electricity consumption, agriculture and per capita output growth rate and the results were not statistically significant. Also, there is positive relation between road energy consumption, agriculture and output growth rate with statistically significant results. We find negative relation between diesel consumption, agriculture and output growth rate, but the relation between diesel consumption and industry is positive. However, none of these results is statistically significant. The study concludes that high priority should be placed on constant and stable supply of electricity and road energy.