The Causal Relationship Between Electricity Supply and Economic Growth in South Africa

This paper investigates the causal relationship between electricity supply and economic growth in South Africa using Autoregressive Distributed Lag (ARDL) model and Vector Error Correction Model (VECM). The ARDL model results reveal existence of long run relationship among the variables. The VECM findings suggested bidirectional causality flowing between electricity supply and economic growth. Therefore, the policy makers should prioritise building capacity additions and infrastructure development of the electricity industry, as this will stimulate economic growth and increase electricity.