Electricity generation and economic growth in Ghana

Abstract

The sectorial relevance and direction of energy policy in the Ghanaian economy as energy demand continue to rise with constant growth in services and a steady decrease in manufacturing growth, requires empirical analysis of the relationship between electricity generation and economic growth. This study analyses time series data from 1983 to 2015 to examine long run cointegration between electricity generation and economic growth using Autoregressive Distributed Lag Model (ARDL) bounds testing of cointegration and Granger causality. We find that in the long run electricity generation affects economic growth. We establish a feedback effect between electricity generations to economic growth. The policy implication is that as more investments are made in the electricity sector, it will boost economic growth which will lead to more investments in the energy sector for further growth.