Energy consumption, political regime and economic growth in sub-Saharan Africa

In this paper, we examine the relationship between energy consumption and economic growth, and how democracy moderates this relationship using panel data of 16 sub-Saharan African (SSA) countries for the period 1971-2013. Employing a panel vector autoregressive model (PVAR) in a generalized method of moments (GMM) framework, the findings support the feedback hypothesis for energy consumption and growth. Second, the interaction variable (energy consumption and democracy) is positively and significantly related to economic growth, supporting the view that democracy moderates the energy consumption and growth nexus. Further, the results provide strong evidence of a uni-directional relationship from trade openness to energy consumption. Additionally, impulse responses and variance decompositions also confirm positive feedback relationships between energy consumption and economic growth, energy prices and economic growth.