Abstract: During the last decades, the relationship between electricity consumption, urbanization and economic growth has been well documented in the energy economics literature. In term of our present case, limited research had been conducted for GCC countries. This study is an addition to the existing literature by empirically investigates the relationship between economic growth, electricity consumption, and urbanization in the Gulf. A standard growth models will be estimated using both fixed-effects and random effects models. In addition, panel unit root and panel co-integration tests will be employed to check for the efficiency of the data. The long run relationship is estimated using fully modified OLS and: Panel Dynamic Least Squares (DOLS) methods. Panel Vector Error Correction Model (VECM) is also utilized in this study.
The study found that there exists a long relationship between GDP per capita electricity consumption, Urban population, inflation, and degree of openness. The degree of adjustment was found to be 0.43 percent, meaning that any deviation for FDI from its long run path will be corrected by 0.43 percent each year.
The main policy implication for GCC to have reasonable level of growth depends on their ability to develop and utilize the effective use of electricity power. The study suggests that to move away from oil which is fluctuate over time to establishing a good base for industrialization by the shift of utilizing a strict balance between electricity consumption and urbanization rate which it doesn’t affect in the long run the climate change.
Keywords: Electricity consumption; urbanization; VEC, Causality, Panel Cointegration, GCC.
Title: Dynamic Linkages between Electricity Consumption, Urbanization and Economic Growth: A VECM and Causality Analysis for GCC
Author: Sufian Eltayeb Mohamed Abdel- Gadir
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
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