The Dynamic Analysis of Electricity Supply and Economic Development: Lessons from Nigeria

Abstract

This paper explores the relationship between electricity supply and economic development in Nigeria using annual time series data. The paper emphasized the need for the correct specification of the model on the basis of which estimation would be valid. It carries out stationarity, cointegration tests and estimation of the model using ordinary least squares in the context of error correction mechanism (ECM). The results showed that Per Capita GDP, lagged electricity supply, technology and Capital are the significant variables that influence Economic development in Nigeria. One strong outcome of the study is that despite the poor state of electricity supply, it influences economic development in Nigerian but its impact is relatively very low. It is recommended that efforts should be geared towards the improvement of technology and that the various power projects should be completed with state of the art technology as this will ultimately reduce power loss and boost electricity supply vis-à-vis economic development.