ABSTRACT
This study investigates the distinct impacts of electricity and petroleum consumption on economic growth in Eastern Africa. Using a Panel Autoregressive Distributed Lag Model and data for a period spanning 2000 to 2021, the study examines both the short-run and long-run effects of these energy sources on Gross Domestic Product. The findings reveal that petroleum consumption has a statistically significant and positive impact on GDP in both the short run and long run. In contrast, while electricity consumption shows a positive but statistically insignificant effect on GDP in the short run, it exhibits a negative and statistically significant impact in the long run. These results suggest that policymakers in Eastern Africa should prioritize sustainable petroleum management to maximize its economic benefits while mitigating potential environmental risks. While the negative coefficient of electricity implies a corrective response of the variables to long-run equilibrium in the face of short-term shocks. As a result, it is recommended that economic shocks caused by energy consumption be considered in terms of their relationship to economic growth, whether positive or negative in the long or short term, as decision makers need to address their impact and limit such shocks on economic growth.
