Abstract

The link between economic performance and energy efficiency is a continuing debate. This paper investigates the long-term equilibrium and causal relationship between energy efficiency and GDP per capita in East African countries for the period between 1990 and 2021. The analysis of EAC countries do not provide clear evidence of convergence in the sense that poor economies tend to grow faster than rich ones in per capita terms. The co-integration test indicates a long-run equilibrium relationship between GDP and energy intensity. In particular, the result based on Johansen shows that the energy intensity level of primary energy and GDP per capita are co-integrated in Rwanda, Burundi and Uganda while the co-integration based on Pedroni occurs in Burundi and Rwanda. The Granger causality shows that there is a unidirectional relation running from GDP to primary energy use in all countries except Kenya. South Sudan is observed to have a bidirectional relationship between variables. Finally, we find that the long-run coefficient of GDP per capita is negatively significant, indicating a change in trend of energy intensity. The results suggest that economic growth in EAC countries can be supported by promoting growth in productivity of the energy industries.

Key words: 1. Energy intensity, 2. GDP per capita, 3. Co-integration; 4.convergence, 5.Energy consumption