The relationship between electricity consumption, foreign direct investment and economic growth: case of Benin

Using the autoregressive distributed lag (ARDL) bounds test with dummy variables and the Toda-Yamamoto approach; this paper investigated the relationship between electricity consumption, foreign direct investment and economic growth in Benin for the period of 1980-2014. Confirming the growth theory for Benin, the results show evidence of unidirectional causalities from electricity consumption to both economic development and foreign direct investment and a long run relationship with a speed of adjustment of 60.72%. These findings suggest that the government of Benin should target the implementation of new strategies to improve access to electricity in order to attract more foreign investment and achieve a rapid and sustainable economic growth.