The Effect of Rural Urban-development Transformation on Electricity Consumption: An Econometric Analysis in South Africa

This paper analyses the impact of urbanization on electricity consumption in South Africa. The sample covers the period from 1971 through to 2013. Trade openness, Capital formation and labour are incorporated as intermittent variables. The Johansen co-integration method and the Granger causality test based on vector error correction model (VECM) are applied to determine this empirical analysis. The results show that the electricity consumption, urbanization, trade openness, labour and capital are co-integrated. It was established that urbanization and trade openness have a positive and a significant impact on electricity consumption. The VECM results reveal an existence of a unidirectional causality flowing from urbanization, trade openness, labour and capital to electricity consumption. The findings of this study bring a fresh perspective for the energy policy makers and urban planners in South Africa. Keywords: Electricity Consumption, Urbanization, Carbon Dioxide, South Africa JEL Classifications: C32, O55, Q4