ENERGY AND INDUSTRIAL PRODUCTIVITY IN NIGERIA: A DISAGGREGATED CASE

Abstract

Energy has been seen as a major driver, and pivotal to industrial productivity as well as economic growth. But, the extent to which this is true within the Nigerian context is unascertainable due to the challenges the sector faces. Stemming from this, this study empirically examined the influence of energy, and industrial productivity in Nigeria between the periods of 1981 to 2018. In addition to the aggregate energy supply, the Energy variable was disaggregated into; petroleum, electricity natural gas, coal consumption, and energy (electricity) prices. Data collected were analysed with descriptive statistics, correlation analysis, unit root, and co-integration tests as well as the Error Correction Model (ECM). The estimated results revealed the existence of a positive relationship between petroleum consumption, coal consumption, energy price, physical capital stock, and industrial output. Coal, energy price and physical capital tend to significantly impact industrial output. However, an inverse relationship exists between industrial output, Natural gas, electricity, and human capital. On the whole, following the inconsistencies in the nature of relationship between industrial output, and some of the disaggregated energy products, the overall impact of energy components cannot be predetermined. Consequently, the study therefore recommends among others the adoption of sectorial-based energy policies in favour of the variables that significantly impact industrial output growth in matters bothering on energy and growth.