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An Empirical Analysis of Short Run and Long Run Relationships between Energy Consumption, Technology Innovation and Economic Growth in Saudi Arabia

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  • Yusuf Opeyemi Akinwale

    (Department of Economics, College of Business Administration, Imam Abdulrahman Bin Faisal University, Dammam, Saudi Arabia.)

Abstract

This study investigates the short- and long-run relationships between energy consumption, technology innovation and economic growth in Saudi Arabia. The direction of causality between them was also determined using Granger causality. The data covers the period between 1980 and 2015, and autoregressive distributed lag (ARDL) was used for analysis as the series consist of the mixture of I(0) and I(1) order of integration. The results reveal that the variables are cointegrated which establish the existence of long run relationships between them. In the long-run, technology innovation has a negative effect on energy consumption while economic growth has a positive effect on energy consumption. Similar result was found in the short run. The results of the Granger causality show a unidirectional causality runs from technology innovation and economic growth to energy consumption. The results of this study support intensive investment in R&D and technology innovation by Saudi government and private companies as well as the implementation of energy efficiency and conservation policies to reduce energy demand, as this would not hamper the economic growth of Saudi Arabia. Government should fully explore the use of renewable energy sources and technologies such as solar and wind to bring about sustainable development in the Country.

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  • Yusuf Opeyemi Akinwale, 2018. "An Empirical Analysis of Short Run and Long Run Relationships between Energy Consumption, Technology Innovation and Economic Growth in Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(4), pages 139-146.
    • Handle: RePEc:eco:journ2:2018-04-18
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    2. Abdul Rahman Shaik & Anis Ali & Ibtisam Dhuwayhi Alanazi, 2023. "Working Capital and Financial Performance in the Energy Sector of Saudi Arabia: Moderating Role of Leverage," International Journal of Energy Economics and Policy, Econjournals, vol. 13(3), pages 158-163, May.
    3. Ahmed Elgayar & Sameh Serag & Noura Metawa, 2024. "Navigating Financial Performance of the MENA Region Energy Sector: The Interplay of Working Capital and Leverage," International Journal of Economics and Financial Issues, Econjournals, vol. 14(2), pages 45-53, March.
    4. Zhang Yu & Muhammad Umer Quddoos & Syed Abdul Rehman Khan & Muhammad Munir Ahmad & Laeeq Razzak Janjua & Muhammad Sajid Amin & Abdul Haseeb, 2023. "Investigating the moderating impact of crime and corruption on the economic growth of Bangladesh: Fresh insights," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 26(2), pages 185-207, June.
    5. Viput Ongsakul & Salil K. Sen, 2019. "Low Carbon Energy Symbiosis for Sustainability: Review of Shared Value-based Policy Metabolism to Enhance the Implementability of the Sustainable Development Goals in Asia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(2), pages 24-30.
    6. Yusuf Opeyemi Akinwale, 2021. "Energy Consumption, Trade Openness and Economic Growth: Empirical Evidence from Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 11(6), pages 373-380.
    7. Nanyue Wang & Pourya Seyedmatin, 2020. "Modeling the Causal Linkages between Trade Openness, Innovation, Financial Development and Economic Growth in Asian Countries," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 10(8), pages 194-203, August.

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    More about this item

    Keywords

    Energy consumption; Technology innovation; Economic growth; Saudi Arabia; Conservation policies; ARDL; Vision 2030;
    All these keywords.

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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