MODELLING IMPACT OF RENEWABLE ENERGY CONSUMPTION TRADE OPENNESS AND FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN NIGERIA

Abstract

This aimed at modelling the impact of renewable energy consumption trade openness and foreign direct investment on economic growth in Nigeria. The study used secondary data which were collected from World Development Indicator (WDI) covering a period of thirty-four (34) years spanning from 1990 - 2023. The data collected were analyzed using Vector Error Correction Model (VECM). Unit root test was carried out using Augmented Dickey Fuller (ADF)Test and
Phillips Perron (PP) test. The results of the root test revealed that Renewable Energy Consumption (REC), Trade Openness (TO), Foreign Direct Investment (FDI) and Gross Domestic Product Per Capita (GDPPC) were stationary after first difference (P< 0.05). The variables were further tested for existence of co-integration using Johansen and Joserius. The results revealed the existence of one co-integrating equation. Thus, the VECM long and short run
were estimated. The results revealed an Error Correction Term (ECT) of -0.235917 implies that an impulse to gross domestic product per capita in the current period will be restored at a speed of adjustment of about 23.6% in the next period. The long run estimated revealed that FDI and TO have negative and significant impact on GDPPC while REC has positive and significant impact on GDPPC in the long run. However, only REC have significant impact on GDPPC in the
short run. Based on these findings, it was recommended among others that the government and general public should priorities renewable energy consumption as it contributed positively to gross domestic product per capita both in short and long run.