ISSN: 2265-6294

The Impact of Petroleum Consumption on Economic Growth in Zimbabwe (1980-2020)

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David Damiyano, Nirmala Dorasamy

Abstract

This paper examined the impact of petroleum consumption on economic growth in Zimbabwe over the period 1980 to 2020. Time-series data were collected from the World Bank website, Reserve Bank of Zimbabwe's publications and Zimbabwe Statistics Agency (ZIMSTAT). To check the stationary of the series ADF and Phillips Perron (PP) unit root tests have been applied. The results of ADF tests revealed that all variables become stationary at first difference which confirms to co-integration test. Furthermore, Johansen Co-integration test has been used to examine the long-run relationship between the dependent and independent variables; therefore, the Johansen Co-integration test revealed that; there exists a long-run relationship among petroleum consumption and Gross Domestic product. The associated vector error correction model was estimated to obtain short-run elasticity's. The results showed that the coefficient of petroleum consumption is significant at all levels of significance, which indicates that there is a strong positive and significant long-run relationship between petroleum consumption and economic growth. This means that a 1% increase in petroleum consumption will enhance Gross Domestic Product by 0.64%. Therefore, the policy makers should prioritise building capacity additions and infrastructure development of the energy sector, as this will stimulate economic growth and increase energy supply in Zimbabwe.

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