Impact of Internet Usage and Energy Consumption on Economic Growth in Nigeria: Evidence from Vector Error Correction Model

Abstract

This study estimated both long-run and short-run impact of internet
usage and energy consumption on economic growth in the case of
Nigerian economy between 1996-2014 and applied vector error
correction model to analyzed the data on internet usage, energy
consumption and economic growth. The breakpoint unit root test
indicated that all the three series were concluded to be I(1) and
cointegrated as shown by Johansen and Juselius test for
cointegration. The long-run result from vector error correction
model revealed that internet usage and energy consumption have
significant positive impact on economic growth whereas CO2
emissions exerts significant negative impact on economic growth.
However, the result indicated that in the short-run energy
consumption has a significant positive impact, while CO2 emissions
has significant negative impact on economic growth and slow
adjustment speed estimated at 20.8 percent annually. The Granger
causality result indicated that there is unidirectional causality
flowing from internet usage to economic growth, CO2 emissions to
economic growth, CO2 emissions to internet usage and economic
growth to energy consumption. The empirical findings of this paper
would serve as a beneficial tool for the same economies to offer
proper ICT, energy consumption and economic growth-related
policy decisions.