The nexus between electricity consumption and economic growth in MENA countries

Bouoiyour, Jamal and Selmi, Refk (2012): The nexus between electricity consumption and economic growth in MENA countries. Forthcoming in: Energy Studies Review

Abstract

We assess the causality between electricity consumption and economic growth for a panel of twelve MENA countries (seven energy exporters and five energy importers) over the period 1975–2010 within a bivariate framework using panel cointegration methods and panel causality test. By doing so, we show that 16.66% of MENA countries supported the growth hypothesis, 25% the conservation hypothesis, 33.33% the feedback hypothesis and 25% the neutrality hypothesis. For energy exporters, we support the growth hypothesis in 14.28% of cases at the same way of conservation hypothesis, the feedback hypothesis in 42.88% and the neutrality hypothesis in 28.57%. For energy importers, almost 60% of cases provide support for conservation hypothesis. Additionally, we show that Iran and Turkey behave better than the rest of countries in terms of the focal link. We attribute this apparently result to the good structuring of the electricity sector.

• Item Type: MPRA Paper
• Language: English
• Keywords: Electricity consumption; economic growth; causality; MENA countries.
• Subjects: F - International Economics > F0 - General; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q0 - General

References

Acaravci, A. and Ozturk, I. (2010), On the Relationship between Energy Consumption, CO2 Emissionsand Economic Growth in Europe. Energy, 35(12), 5412-5420.

Al-Iriani, M.A. (2006), Energy–GDP Relationship Revisited: An Example from GCC Countries Using Panel Causality. Energy Policy, 34(17), 3342-3350.

Al-Mulali, U. (2011),Oil Consumption, CO2 Emission and Economic Growth in MENA Countries. Energy Policy, 36(10), 6165-6171.

Apergis, N., Payne J-E. (2009), CO2 emissions, energy usage, and output in Central America. Energy Policy 37, 3282–3286.

Apergis, N., Payne, J.E. (2010), The Emissions, Energy Consumption, and Growth Nexus: Evidencefrom the Common Wealth of Independent States. Energy Policy, 38(1), 650-655.

Arouri, M.H, Ben Youssef, A., M'Henni, H, Rault, C. (2012), Energy Consumption, Economic Growth and CO2 Emissions in Middle East and North African Countries. CESifo Group Munich, Working Paper Series, 3726.

Asafu-Adjaye, J., (2000), The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries, Energy Economics, 22; 615-625.

Belke, A., Dobnik, F. and Dreger, C. (2011), Energy consumption and economic growth: New insights into the cointegration relationship. Energy Economics 33(5), 782–789.

Bildirici, M., Bakirtas, T. and Kayiksi, F. (2012), Economic growth and electricity consumption: An ARDL analysis. Conference on International energy, Vienna 2012.

Bouoiyour, J. and Selmi, R. (2013), GCC countries and the relationship between oil price and real exchange rate. Working paper CATT, University of Pau.

Dickey, D.A., Fuller, W.A. (1979), Distribution of the Estimators for AutoRegressive Time Series with a Unit Root. Journal of the American Statistical Association, 74(366), 427-431.

Dobnick, F., (2011), Energy consumption and economic growth revisited : structural breaks and cross section dependence, Ruhr Economic Papers n° 303.

Ebohon, O.J., (1996), Energy, economic growth andcausality in developing countries: a case study of Tanzania and Nigeria. Policy 24 (5), 447–453.

Engle, R.F. and Granger, C.W.J. (1987), Cointegration and Error Correction: Representation, Estimation, and Testing. Econometrica, 55(2), 251-276.

Fisher, R.A. (1932), Statistical Methods for Research Workers (4th Ed.). Edinburgh, Scotland: Oliver and Boyd.

Ghosh, S. (2010), Examining Carbon Emissions Economic Growth Nexus for India: A MultivariateCointegration Approach. Energy Policy, 38(6), 3008-3014.

Im, K., Pesaran, M.H., Shin, Y. (2003), Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics, 115(1), 53-74.

Lau, E., Chye, Xiao-Hui, Choong, Chee-Keong. (2011), Energy-Growth Causality: Asian Countries Revisited. International Journal of Energy Economics and Policy, 1(4), 140-149.

Lee C-C., Chang C-P. (2005), Structural breaks, energy consumption, and economic growth revisited: evidence from Taiwan. Energy Econom 27, 857–72.

Mahadevan, R. and Asafu-Adjaye, J. (2007), Energy consumption, economic growth and prices: A reassessment using panel VECM for developed and developing countries. Energy Policy 35(4), 2481–2490.

Narayan, P-K., and Prasad, A. (2008), Electricity consumption-real GDP causality nexus: evidence from a bootstrapped causality test for 30 OECD countries. Energy Policy 36, 910–8.

Narayan, P.K. and Singh, B. (2007), The electricity consumption and GDP nexus for the Fiji Islands. Energy Economics, 29: 1141-1150.

Narayan, P. K. and R. Smith (2009), Multivariate Granger causality between electricity consumption, exports and GDP: Evidence from a panel of Middle Eastern countries. Energy Policy 37(1), 229–236.

Niu, S., Ding, Y. Niu, Y. Li, Y. and Luo, G. (2011), Economic growth, energy conservation and emissions reduction: A comparative analysis based on panel data for 8 Asian-Pacific countries. Energy Policy 39(4), 2121–2131.

Ozturk, I. (2010), A literature survey on energy-growth nexus. Energy Policy, 38, 340-349.

Ozturk, I., Acaravci, A. (2011), CO2 Emissions, Energy Consumption and Economic Growth in Turkey. Renewable and Sustainable Energy Reviews, 14(9), 3220-3225.

Payne, J-E., (2010), A survey of the electricity consumption and growth literature, Applied energy 87, 723- 731.

Pedroni, P. (2004), Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP. Econometric Theory, 20(3), 597-625.

Pesaran, M.H., Shin, Y. (1999), Pooled Mean Group Estimation of Dynamic Heterogeneous Panels. Journal of the American Statistical Association, 94(446), 621-634.

Phillips, P.C.B., Perron, P. (1988), Testing for a Unit Root in Time Series Regressions. Biometrika. 75(2), 335-346.

Reddy A-K. (2000), Energy and Social Issues, in “World Energy Assessment”, UNPD, New York. ISBN 92-1-126-126-0.

Toman, M. and Jemelkova, B., (2003). Energy and Economic Development: An Assessment of the State of Knowledge. Energy Journal, 24, 93-112.

Tang, C-F. (2008), A re-examination of the relationship between electricity consumption and economic growth in Malaysia. Energy Policy 36, 3077–85.

Templet, P H. (1999). Energy, diversity and development in economic systems: an empirical analysis. Ecological Economics 30 (2), 223–233.

Wolde-Rufael Y. (2006). Electricity consumption and economic growth: a time series experience for 17 African countries. Energy Policy, 34,1106–14.

Yoo, S-H. (2006), The causal relationship between electricity consumption and economic growth in the ASEAN countries. Energy Policy 34, 3573–82.

Yuan, J., Zhao, C., Yu, S. and Hu, Z. (2007), Electricity consumption and economic growth in China: cointegration and co-feature analysis. Energy Economics 29, 1179–91.