ELECTRICITY CONSUMPTION AND INDUSTRIAL OUTPUT: ADDRESSING THE POWER-GROWTH NEXUS

This study investigates the dynamic relationship between electricity consumption and industrial output,
addressing the "power-growth nexus" within a modern macroeconomic framework. Utilizing time-series
data spanning from 1990 to 2025, the research focuses on the critical role of energy as a primary factor
of production alongside capital and labor. The methodology employs the Autoregressive Distributed Lag
(ARDL) bounds testing approach to evaluate both short-run fluctuations and long-run equilibrium
relationships. Empirical results from the unit root tests confirm that all variables are integrated of order
one, 𝐼(1), providing a robust foundation for cointegration analysis. The ARDL bounds test reveals a
statistically significant long-run relationship, with an F-statistic of 7.167 exceeding the critical upper
bound. The estimation results highlight electricity consumption as the most dominant driver of industrial
productivity; a 1% increase in electricity usage is associated with a 0.72% increase in industrial output.
Furthermore, gross fixed capital formation shows a significant positive impact, while the labor force
appears statistically negligible in the short-run framework. Diagnostic assessments, including the
Breusch-Godfrey, Breusch-Pagan-Godfrey, and Jarque-Bera tests, confirm the absence of serial
correlation, heteroscedasticity, and non-normality, ensuring model reliability. The high R-squared value
of 0.965 indicates that the model explains 96.5% of the variation in industrial output. These findings
suggest that stable energy infrastructure and sustained capital investment are foundational to national
industrial trajectories. The study recommends that policymakers prioritize grid stabilization and energy
efficiency to foster a resilient manufacturing sector in the post-pandemic era.