Economic Growth and Electricity Consumption in GCC and MENA Countries

Abstract

This study estimates the causal relationship between oil rents, electricity consumption and economic growth at aggregate levels with annual data from between 1972 and 2011 for the Arab states of the Gulf and some Middle East and North African countries. An autoregressive distributed lag bounds test shows that oil rents, economic growth and electricity consumption are cointegrated for these countries in a stable manner over this whole period. Granger causality tests indicate that directions of causalities differ for the countries according to their natural resource levels. Thus, these countries can be classified according to their oil rent levels for implementing energy policies such as energy conservation.