Institutions, renewable energy consumption and industrial performance in West Africa

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Abstract This study examined the role of institutions in modifying the impact of renewable energy consumption on industrial performance in West Africa, and how the relationship differ across countries within the sub region based on income classification. The Driscoll-Kraay standard error and the panel-corrected standard error (PCSE) techniques were utilized to estimate the fixed effects and random effects models, respectively. Institutional quality index was computed using the principal component analysis (PCA). The results reported that renewable energy consumption enhances industrial performance in West Africa and in low-income countries (LICs). However, when institutional quality is interacted with renewable energy consumption, there is a dampening impact on industrial performance not only in West Africa but also in lower-middle-income countries (LMICs). This implies that improving the quality of institutions in West Africa would be instrumental to sustaining and deepening the impact of renewable energy consumption on industrial performance.JEL ClassificationC33, L60, Q40.

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