The Relationship Between High-Income Countries in Middle East and North Africa on Energy Consumption and Increase in Gross Domestic Product

Abstract

Electricity, which emerged as a secondary energy source, has been one of the important input items in production since its widespread use. In this study, it is analyzed in 7 countries (Bahrain, United Arab Emirates, Israel, Qatar, Qatar, Kuwait, Oman and Saudi Arabia) in the high-income Middle East and North Africa (MENA) countries group. Using data on public and commercial services, residential, industrial, total other sectors (agriculture, transportation), total electricity consumed and GDP for the period 1990-2021, the relationship between sectoral electricity consumption and economic growth is analyzed with the Panel Granger causality test. As a result of the analysis, while there is no long-run relationship between public and commercial services, residential, total other sectors (agriculture, transportation) and total electricity consumed and growth, there is no causality relationship between these variables, while there is a unidirectional causality relationship from growth to electricity consumption in industry. Contrary to previous studies, the reason for the absence of a causality relationship from electricity consumption to GDP growth in this study is that export revenues from natural resources and high-tech products make a significant contribution to the GDP formation of the countries included in the analysis. These results show that, contrary to the same directional relationship between electricity consumption and GDP growth in the literature, it is not valid for natural resource and high technology exporter countries. We can say that the results of the study make an important contribution to the literature in this respect.