The nexus between energy consumption and economic growth in Tanzania, 1980-2010

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University of Dar es Salaam
This study evaluated and compared the effect of both renewable and non-renewable energy consumption on economic growth in Tanzania so as to find out whether GDP benefits from substituting renewable for non-renewable energy sources. The study used a Cobb-Douglas production function to estimate the relationship between economic growth and energy consumption in which real GDP was a dependent variable and capital, per capita labour income, and energy were the independent variables. Energy was divided into renewable and non-renewable energy consumption, and was measured by hydroelectric power and oil consumption respectively. The empirical results show that all variables have positive coefficient. However, to be more specifically on the objectives of the study, one percentage increase in oil consumption leads to 0.09 percentage increase in economic growth. Oil consumption is statistically significant at 10 percent. One percentage increase in hydroelectric power consumption leads to increase in economic growth by approximately 0 percent. Hence, renewable power consumption has very little or no impact at all on economic growth, and is not statically significant at all levels. The study also employed granger causality test to check the direction of causality between energy consumption and economic growth and it was found that a unidirectional causality running from oil consumption to economic growth exist. These findings confirm the growth hypothesis. On the other hand, the result shows that there is no causality between renewable power consumption and economic growth.
Available in print form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HD9502.T34M372)
energy consumption, economic growth, Economics
Matage, A.E. (2017) The nexus between energy consumption and economic growth in Tanzania, 1980-2010. Master dissertation, University of Dar es Salaam. Dar es Salaam.