The Relationship between Energy Security, Exports and Economic Growth: The Case of the Middle East Countries

Abstract

In this study, it is aimed to examine the relationship between energy security, growth and exports for 16 Middle Eastern countries between 1980 and 2016 by taking into account the 4 dimensions of energy security (4 A's of energy security). Unlike other studies on the subject of Middle Eastern countries, this study covers more Middle Eastern countries and a wider period, and takes into account the cross-sectional dependency. The results of empirical analysis conducted by using second-generation unit-root and cointegration methods demonstrate that there is cointegration relationship between the variables. According to the results obtained from AMG estimator, which also considered cross-section dependence; the 1% increase in energy security risk level reduces the economic growth by approximately 0.66%, while the 1% increase in exports increases the economic growth by 0.41%. Finally, Granger non-causality test results demonstrate that there is a bi-directional causality relationship between variables. The results highlight the importance of policies to be implemented policies to ensure energy security such as choosing safe trade routes in oil and gas trade, ensuring the security of the major crossing points in the region, developing policies to decrease the share of energy revenues/expenses in the region economies, implementing policies for country and route diversification, ensuring energy efficiency and the use of renewable energy sources to prevent environmental pollution.