Non-Renewable Energy Consumption and Economic Growth: Evidence from Uganda

Abstract

Back Ground: This paper concerns itself with an investigation on non-renewable energy consumption and economic growth, the case of Uganda. The arguments of a causal relationship between non-renewable energy consumption and economic growth have dissenting view.  Methods: It used time series data econometric techniques to establish a causal link between variables of study. The Vector error correction and structural vector autoregression, Granger for causal linkage and Johansen co-integration test was carried out to ascertain if there exists a long run relationship between non-renewable energy consumption and real GDP. Results: The results support the growth hypothesis between non-renewable energy consumption and economic growth in the long run as shown in the VECM. This SVAR shows that these results are not significant Conclusion: The conclusion therefore is that non-renewable energy consumption in regard to economic growth is mainly attributed to imported fossil fuels particularly diesel that is used in thermal generators to run electricity hence unable to support the growth process over the long run. Novelty: This paper provides insights on how energy drives economic growth and sustainable development. It also captures the impact of investment into overall economic growth that is in line with the contemporary global agenda.