Energy consumption and economic growth in Rwanda

Abstract

Energy is a critical ressource for the economy.Energy resources are the most important sources of production that can help to grow the economy, particularly in high-energy-intensive countries. The importance of energy is considered a source of a country’s output. Economic growth can be defined as the boosting of a country's output through goods and services over time. This study sought to identify the causality linkage between energy usage and the economic growth of Rwanda as a developing country in a short period or in a long period. The study used data from 1990 to 2019, and the cointegration and vector error correction (VECM) methods were used as the analysis approach. The results showed that standard deviation shocks to renewable energy usage have a negative effect in short-term real GDP but on the positive side and a negative effect in long term on real GDP but in the negative side. However, in the period of short and long, the shock to nonrenewable energy usage has a positive impact on the real GDP, proving that with either energy consumption or real GDP as dependent variables are more significant, Rwanda has previously proven its ability to create, deploy, reproduce, and scale up renewable energy consumption by increasing its contribution to complete energy access. Encouragement of renewable energy consumption particularly with respect to the deployment of clean technologies that incorporate renewable energy into manufacturing processes could boost economic growth