The nexus between electricity consumption and economic growth in MENA countries

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.