COINTEGRATION RELATIONSHIP BETWEEN ECONOMIC GROWTH, EXPORT AND ELECTRICITY CONSUMPTION: EVIDENCE FROM FIJI

Energy dependent small developing island states are besieged to sustain potential rate of growth. This is due to increase in energy prices and lack of evidence based policy on long term sustainable energy use. This paper examines the long run relationship between economic growth, export and electricity consumption in Fiji over the period 1981-2011. Employing Granger causality test it is found that there is cointegrating relationship between economic growth, export and electricity consumption. The casual relationship between the variables was investigated within the error correction model framework. We found that in the long run causality runs from electricity consumption and export to economic growth. Based on this empirical analysis some important policy implications are suggested