Volume 4, Issue 3, June 2019, Page: 41-55
The Impact of Disaggregated Electricity Generation on Economic Growth: MENA Countries (2005-2014)
Haidy Amer, School of Business, Arab Academy for Science, Technology and Maritime Transport, Alexandria, Egypt
Received: May 23, 2019;       Accepted: Jul. 5, 2019;       Published: Jul. 31, 2019
DOI: 10.11648/j.ijeee.20190403.11      View  23      Downloads  7
This paper examines the impact of electricity generation on economic growth using data for a panel of 12 countries elected from MENA region over the period 2005-2014. The paper contributes to the literature in several ways. First, in contrast to the present literature which focuses on electricity consumption, this paper focuses on the impact of electricity generation on economic growth. This is because not all of the electricity that is generated is eventually consumed, due to dissemination losses, stolen power and the other so called “non-technical losses” which makes it necessary to examine the impact of electricity generation on economic growth. Second, we disaggregate the influence of total electricity generation on growth into renewable and non-renewable effects. The fact that the renewable electricity is gaining a great importance and the global care for its implementation makes it necessary to study its effect in the MENA region given the great potential of these sources in the region. Never the less, the effect of such sources of electricity on the economic growth is being investigated while at the same time using control variables like trade openness, financial development and CO2 emissions. Third, the study is different from previous studies in focusing on granger causality and/or cointegration by estimating the effect of electricity generation on growth using the System Generalized Method of Moments(GMM). GMM is being used given that electricity generation and many of the other regressors in the model may be jointly determined with GDP growth and thus be treated as endogenous variables a matter that can be handled by the GMM. Our results indicate a strong negative and statistically significant relationship between renewable and non-renewable electricity generation indicating the possibility of substitution between the two sources in these selected countries, yet with different impact on the economic growth.
Renewable Electricity Generation, Fossil Fuel, Economic Growth
To cite this article
Haidy Amer, The Impact of Disaggregated Electricity Generation on Economic Growth: MENA Countries (2005-2014), International Journal of Economy, Energy and Environment. Vol. 4, No. 3, 2019, pp. 41-55. doi: 10.11648/j.ijeee.20190403.11
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Aissa, M. S. B., Jebli, M. B. and Youssef, S. B., 2014. Output, renewable energy consumption and trade in Africa. Energy Policy, 66, pp. 11-18.
Apergis, N. and Payne, J. E., 2010. The emissions, energy consumption, and growth nexus: evidence from the commonwealth of independent states. Energy policy, 38(1), pp. 650-655.
Andrews, D. W. and Lu, B., 2001. Consistent model and moment selection procedures for GMM estimation with application to dynamic panel data models. Journal of Econometrics, 101(1), pp. 123-164.
Arouri, M. E. H., Youssef, A. B., M'henni, H. and Rault, C., 2012. Energy consumption, economic growth and CO2 emissions in Middle East and North African countries. Energy policy, 45, pp. 342-349.
Asif, M., Sharma, R. B. and Adow, A. H. E., 2015. An empirical investigation of the relationship between economic growth, urbanization, energy consumption, and CO2 emission in GCC countries: a panel data analysis. Asian Social Science, 11(21), p. 270.
Ben Jebli, M., Ben Youssef, S. and Ozturk, I., 2013. The environmental Kuznets curve: the role of renewable and non-Renewable energy consumption and trade openness.
Bölük, G. and Mert, M., 2014. The Renewable Energy and Growth: Evidence for Turkey using Environmental Kuznets Curve Model. In The WEI International Academic Conference Proceedings, The West East Institute, Budapest, Hungary.
Bond, S. R., Hoeffler, A. and Temple, J. R., 2001. GMM estimation of empirical growth models.
Blundell, R. and Bond, S., 1998. Initial conditions and moment restrictions in dynamic panel data models. Journal of econometrics, 87(1), pp. 115-143.
Breitung, J. and Das, S., 2005. Panel unit root tests under cross‐sectional dependence. Statistica Neerlandica, 59(4), pp. 414-433.
Breitung, J., 2001. The local power of some unit root tests for panel data. In Nonstationary panels, panel cointegration, and dynamic panels (pp. 161-177). Emerald Group Publishing Limited.
Depuru, S. S. S. R., Wang, L. and Devabhaktuni, V., 2011. Electricity theft: Overview, issues, prevention and a smart meter based approach to control theft. Energy Policy, 39(2), pp. 1007-1015.
Dees, P. and Vidican Auktor, G., 2018. Renewable energy and economic growth in the MENA region: empirical evidence and policy implications. Middle East Development Journal, 10(2), pp.225-247.
Farhani, S. and Ben Rejeb, J., 2012. Energy consumption, economic growth and CO2 emissions: Evidence from panel data for MENA region. International Journal of Energy Economics and Policy (IJEEP), 2(2), pp. 71-81.
Farhani, S. and Shahbaz, M., 2014. What role of renewable and non-renewable electricity consumption and output is needed to initially mitigate CO2 emissions in MENA region?. Renewable and Sustainable Energy Reviews, 40, pp. 80-90.
Gorus, M. S. and Aydin, M., 2019. The relationship between energy consumption, economic growth, and CO2 emission in MENA countries: Causality analysis in the frequency domain. Energy, 168, pp. 815-822.
Gövdeli, T., 2019. CO2, quality of life and economic growth in mena countries. Cumhuriyet Üniversitesi İktisadi ve İdari Bilimler Dergisi, 20(1), pp. 281-292.
Hadri, K., 2000. Testing for stationarity in heterogeneous panel data. The Econometrics Journal, 3(2), pp. 148-161.
Halicioglu, F., 2009. An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey. Energy Policy, 37(3), pp. 1156-1164.
Hansen, L. P., 1982. Large sample properties of generalized method of moments estimators. Econometrica: Journal of the Econometric Society, pp. 1029-1054.
Harris, R. D. and Tzavalis, E., 1999. Inference for unit roots in dynamic panels where the time dimension is fixed. Journal of econometrics, 91(2), pp. 201-226.
Hedia, T., 2015. Relationship Between The Consumption of Electricity of Non-Renewable Origin and Economic Growth in Tunisia: Causality Analysis. In The 2015 WEI International Academic Conference Proceedings.
Im, K. S., Pesaran, M. H. and Shin, Y., 2003. Testing for unit roots in heterogeneous panels. Journal of econometrics, 115(1), pp. 53-74.
Kahia, M., Aïssa, M. S. B. and Charfeddine, L., 2016. Impact of renewable and non-renewable energy consumption on economic growth: New evidence from the MENA Net Oil Exporting Countries (NOECs). Energy, 116, pp. 102-115.
Kahia, M., Aïssa, M. S. B. and Lanouar, C., 2017. Renewable and non-renewable energy use-economic growth nexus: The case of MENA Net Oil Importing Countries. Renewable and Sustainable Energy Reviews, 71, pp. 127-140.
Kahia, Montassar & Ben Jebli, Mehdi & Belloumi, Mounir., 2019. Analysis of the impact of renewable energy consumption and economic growth on carbon dioxide emissions in 12 MENA countries. Clean Technologies and Environmental Policy. 10.1007/s10098-019-01676-2.
Kao, C., 1999. Spurious regression and residual-based tests for cointegration in panel data. Journal of econometrics, 90(1), pp. 1-44.
Leitão, N. C., 2014. Economic growth, carbon dioxide emissions, renewable energy and globalization. International Journal of Energy Economics and Policy, 4(3), pp. 391-399.
Levin, A., Lin, C. F. and Chu, C. S. J., 2002. Unit root tests in panel data: asymptotic and finite-sample properties. Journal of econometrics, 108(1), pp. 1-24.
Maddala, G. S. and Wu, S., 1999. A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and statistics, 61(S1), pp. 631-652.
Muhammad, B., 2019. Energy consumption, CO2 emissions and economic growth in developed, emerging and Middle East and North Africa countries. Energy.
Muhammad, S. S., Muhammad, Z. and Muhammad, S., 2011. Renewable and nonrenewable energy consumption, real GDP and CO2 emissions nexus: a structural VAR approach in Pakistan.
Omri, A., 2013. CO2 emissions, energy consumption and economic growth nexus in MENA countries: Evidence from simultaneous equations models. Energy economics, 40, pp. 657-664.
Omri, A., Daly, S., Rault, C. and Chaibi, A., 2015. Financial development, environmental quality, trade and economic growth: What causes what in MENA countries. Energy Economics, 48, pp. 242-252.
Ozturk, F., 2017. Energy consumption–GDP causality in MENA countries. Energy Sources, Part B: Economics, Planning, and Policy, 12(3), pp. 231-236.
Ozturk, I. and Acaravci, A., 2011. Electricity consumption and real GDP causality nexus: Evidence from ARDL bounds testing approach for 11 MENA countries. Applied energy, 88(8), pp. 2885-2892.
Pesaran, M. H., 2004. General diagnostic tests for cross section dependence in panels.
Pesaran, M. H., 2007. A simple panel unit root test in the presence of cross‐section dependence. Journal of applied econometrics, 22(2), pp. 265-312.
Raheem, I. D. and Yusuf, A. H., 2015. Energy consumption-economic growth nexus: evidence from linear and nonlinear models in selected African countries. International Journal of Energy Economics and Policy, 5(2), pp. 558-564.
Roodman, D., 2008. Practitioners’ corner. Oxford Bulletin of Economics and Statistics, 71(1), pp. 0305-9049.
Sadorsky, P., 2010. The impact of financial development on energy consumption in emerging economies. Energy policy, 38(5), pp. 2528-2535.
Sebri, M. and Ben-Salha, O., 2014. On the causal dynamics between economic growth, renewable energy consumption, CO2 emissions and trade openness: Fresh evidence from BRICS countries. Renewable and Sustainable Energy Reviews, 39, pp. 14-23.
ŞENTÜRK, M. and Edgardo, S. I. C. A., 2016. Economic Growth and Energy Consumption in Turkey and Italy: A Frequency Domain Causality Analysis. Ömer Halisdemir Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 9(4), pp. 107-119.
Shafiei, S. and Salim, R. A., 2014. Non-renewable and renewable energy consumption and CO2 emissions in OECD countries: A comparative analysis. Energy Policy, 66, pp. 547-556.
Spetan, A. A., 2016. Renewable energy consumption, CO2 Emissions and Economic growth: A case of Jordan. International Journal of Business and Economics Research, 5(6), pp. 217-226.
Tamazian, A., Chousa, J. P. and Vadlamannati, K. C., 2009. Does higher economic and financial development lead to environmental degradation: evidence from BRIC countries. Energy policy, 37(1), pp. 246-253.
Tiwari, A. K., 2011. Comparative performance of renewable and nonrenewable energy source on economic growth and CO2 emissions of Europe and Eurasian countries: A PVAR approach. Economics Bulletin, 31(3), pp. 2356-2372.
Wesseh Jr, P. K. and Zoumara, B., 2012. Causal independence between energy consumption and economic growth in Liberia: Evidence from a non-parametric bootstrapped causality test. Energy Policy, 50, pp. 518-527.
Westerlund, J., 2005. New simple tests for panel cointegration. Econometric Reviews, 24(3), pp. 297-316.
Westerlund, J., 2007. Testing for error correction in panel data. Oxford Bulletin of Economics and statistics, 69(6), pp. 709-748.
Westerlund, J. and Edgerton, D. L., 2007. A panel bootstrap cointegration test. Economics letters, 97(3), pp. 185-190.
Browse journals by subject