ADSU International Journal of Applied Economics, Finance and Management

Impact Of Energy Consumption On Economic Growth In Sub-Saharan Countries

Abstract

The study examines the impact of energy consumption on economic growth in ten Sub-Saharan African Countries spanning 1990 to 2023. The novelty of the study is the utilization of the Driscoll and Kraay Estimation Technique, which adjusts for common problems in panel data, such as cross-sectional dependence, autocorrelation, and heteroscedasticity. The empirical evidence suggests that energy consumption stimulates economic growth. The positive influence of energy consumption on economic growth, confirms the energy-led growth hypothesis. Similarly, evidence indicates that foreign direct investment and capital stock enhance economic growth in the SSA countries. However, evidence suggests that labor force exerts a negative influence on economic growth. Therefore, the study recommends that policies should be developed to attract both domestic and foreign investment in the energy sector. Additionally, strategies should be implemented to create an enabling environment that fosters and supports investment.