Dynamic panel modelling of electricity consumption and Economic Community of West African States (ECOWAS)

The effect of electricity consumption on economic growth of the Economic Community of West African States (ECOWAS) Member Countries has been examined during the period 2007–2016. The study applied both static and dynamic panel models in the form of Fixed‐Effect, Random‐Effect, Difference GMM and System GMM. The results revealed that electricity consumption has a positive and statistically significant impact on economic growth for both static and dynamic panel models. Capital has also been found to have impacted positively and significantly on economic growth in both models. Similarly, labour showed a positive and significant impact on economic growth system GMM model only. Since the study supports electricity consumption led‐growth hypothesis, therefore, it is recommended that ECOWAS countries should explore other alternative sources of electricity generation in order to ensure sufficient and reliable supply of electricity. This can be achieved at individual country level by utilising the potentials of renewable endowments such as biomass, biofuels and solar energy available to each country. Equally, the regional efforts to establish West African Power Pool (WAPP) and West African Gas Pipeline (WAGP) in order to increase the supply as well as grid reliability should be strengthened.