Comparative Investigation of Growth-Led Energy and Environmental Kuznets Curve Hypotheses in Ghana and Nigeria

Abstract

Although energy use is essential for growth, economic growth also spurs the need for more energy demand. Hence, this study aims to align with the goals of the 2030 Sustainable Development Agenda, which includes ensuring access to modern and reliable energy. It also seeks to increase the resilience of human settlements and cities. It fills a lacuna in the literature to comparatively investigate the energy-growth dynamics in Ghana and Nigeria from two standpoints: (1) does the growth-led energy hypothesis hold, and (2) is the inverted U-shaped environmental Kuznets curve hypothesis? Using time-series data from 1980 to 2019, the ARDL-ECM and DOLS approaches demonstrate that (1) in the long run, a change in per capita GDP leads to a significant decrease (increase) in fossil energy use in Ghana (Nigeria). In other words, the asymmetric growth-led energy hypothesis holds in both countries; (2) the inverted U-shaped EKC does not hold for Ghana but for Nigeria; and (3) domestic credit exerts a positive demand for fossil energy in both countries. These outcomes show that, through proper implementation and legislation, both countries’ governments should address environmental concerns to accomplish the SDGs within the specified timeframe. Policy recommendations were mixed.