The impact of income inequality on economic growth in MENA region: The role of energy poverty threshold effect

Abstract

This research paper explores the impact of income inequality on economic growth under the influence of energy poverty threshold effect in 12 Middle East-North African (MENA) countries from 2000 to 2019. We examine the possibility of a non-linear connection between income inequality and growth below and above a specific energy poverty level using the fixed-effect threshold panel proposed by Hansen (1999) [107]. Our results suggest that income disparity adversely influences economic development, no matter the level of energy poverty. Moreover, our results indicate that the detrimental impact of inequality on economic growth diminishes as energy poverty decreases and reaches a certain threshold. Therefore, addressing energy poverty helps to minimize the negative economic consequences of inequality. Our research provides valuable insights for MENA. In fact, policymakers can mitigate these adverse effects by supporting and expanding the diffusion of clean fuels and modern cooking techniques. A comprehensive approach that combines expanding clean energy infrastructure, providing financial incentives, and conducting public awareness and training programs can ensure the availability, affordability while facilitating their efficient use.