Electricity consumption and economic growth in Burkina Faso: A cointegration analysis

This study empirically establishes the direction of causality between electricity consumption and economic growth in Burkina Faso for the period 1968-2003. The bounds test yields evidence of cointegration between electricity consumption, GDP, and capital formation when electricity consumption and GDP are used as dependent variable. Causality results indicate that there is no significant causal relationship between electricity consumption and investment. Estimates, however, detect in the long-run a bidirectional causal relationship between electricity use and real GDP. There is also evidence of a positive feedback causal relationship between GDP and capital formation. Burkina Faso is therefore an energy dependent country. It is also a country in which electricity consumption is growing with the level of income. All of this shows that electricity is a significant factor in socio-economic development in Burkina Faso; as such, energy policy must be implemented to ensure that electricity generates fewer potential negative impacts.