IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v7y2015i5p5153-5170d48811.html
   My bibliography  Save this article

Sustainable Energy Development in Saudi Arabia

Author

Listed:
  • Mounir Belloumi

    (Laboratoire du Management d'Innovation et du Developpement Durable, University of Sousse, Sousse 4023, Tunisia
    College of Administrative Sciences, Najran University, Najran 1988, Saudi Arabia
    These authors contributed equally to this work.)

  • Atef Saad Alshehry

    (College of Administrative Sciences, Najran University, Najran 1988, Saudi Arabia
    These authors contributed equally to this work.)

Abstract

The main objective of this research is to study the role of energy consumption in economic growth in Saudi Arabia over the period of 1971–2012 using the autoregressive distributed lag (ARDL) cointegration procedure, and based on neoclassical growth, endogenous growth, and ecological-economics viewpoints. Our empirical results show the existence of a cointegrating relationship between the different variables investigated. In addition, all the inputs (conventional and non-conventional) Granger cause economic growth in both the short and long runs. Our findings confirm the energy-led growth hypothesis in the case of Saudi Arabia. Hence, energy conservation policies may deteriorate economic growth in Saudi Arabia if they are not followed by measures that improve energy efficiency, energy saving technologies and encourage the investment and use of renewable energy sources such as solar and wind energies that can participate in the attenuation of climate changes.

Suggested Citation

  • Mounir Belloumi & Atef Saad Alshehry, 2015. "Sustainable Energy Development in Saudi Arabia," Sustainability, MDPI, vol. 7(5), pages 1-18, April.
    • Handle: RePEc:gam:jsusta:v:7:y:2015:i:5:p:5153-5170:d:48811
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/7/5/5153/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/7/5/5153/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yuan, Jia-Hai & Kang, Jian-Gang & Zhao, Chang-Hong & Hu, Zhao-Guang, 2008. "Energy consumption and economic growth: Evidence from China at both aggregated and disaggregated levels," Energy Economics, Elsevier, vol. 30(6), pages 3077-3094, November.
    2. Granger, C. W. J., 1988. "Causality, cointegration, and control," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 551-559.
    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    4. Balasubramanyam, V N & Salisu, M & Sapsford, David, 1996. "Foreign Direct Investment and Growth in EP and IS Countries," Economic Journal, Royal Economic Society, vol. 106(434), pages 92-105, January.
    5. Damette, Olivier & Seghir, Majda, 2013. "Energy as a driver of growth in oil exporting countries?," Energy Economics, Elsevier, vol. 37(C), pages 193-199.
    6. Stephan B. Bruns, Christian Gross and David I. Stern, 2014. "Is There Really Granger Causality Between Energy Use and Output?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    7. Yousef Alyousef, 2012. "Energy Efficiency Initiatives for Saudi Arabia on Supply and Demand Sides," Chapters, in: Zoran Morvaj (ed.), Energy Efficiency - A Bridge to Low Carbon Economy, IntechOpen.
    8. Jonathan B. Hill, 2007. "Efficient tests of long-run causation in trivariate VAR processes with a rolling window study of the money-income relationship," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(4), pages 747-765.
    9. Salamaliki, Paraskevi K. & Venetis, Ioannis A., 2013. "Energy consumption and real GDP in G-7: Multi-horizon causality testing in the presence of capital stock," Energy Economics, Elsevier, vol. 39(C), pages 108-121.
    10. Mehrara, Mohsen, 2007. "Energy consumption and economic growth: The case of oil exporting countries," Energy Policy, Elsevier, vol. 35(5), pages 2939-2945, May.
    11. Dufour, Jean-Marie & Pelletier, Denis & Renault, Eric, 2006. "Short run and long run causality in time series: inference," Journal of Econometrics, Elsevier, vol. 132(2), pages 337-362, June.
    12. Mohammed Issa Shahateet, 2014. "Modeling Economic Growth and Energy Consumption in Arab Countries: Cointegration and Causality Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 4(3), pages 349-359.
    13. Shahbaz, Muhammad & Tang, Chor Foon & Shahbaz Shabbir, Muhammad, 2011. "Electricity consumption and economic growth nexus in Portugal using cointegration and causality approaches," Energy Policy, Elsevier, vol. 39(6), pages 3529-3536, June.
    14. Tsangyao Chang & Wenshwo Fang & Li-Fang Wen, 2001. "Energy consumption, employment, output, and temporal causality: evidence from Taiwan based on cointegration and error-correction modelling techniques," Applied Economics, Taylor & Francis Journals, vol. 33(8), pages 1045-1056.
    15. Stern, David I. & Enflo, Kerstin, 2013. "Causality between energy and output in the long-run," Energy Economics, Elsevier, vol. 39(C), pages 135-146.
    16. Belloumi, Mounir, 2014. "The relationship between trade, FDI and economic growth in Tunisia: An application of the autoregressive distributed lag model," Economic Systems, Elsevier, vol. 38(2), pages 269-287.
    17. Cheng, Benjamin S. & Lai, Tin Wei, 1997. "An investigation of co-integration and causality between energy consumption and economic activity in Taiwan," Energy Economics, Elsevier, vol. 19(4), pages 435-444, October.
    18. Menegaki, Angeliki N., 2014. "On energy consumption and GDP studies; A meta-analysis of the last two decades," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 31-36.
    19. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    20. Stern, David I., 1993. "Energy and economic growth in the USA : A multivariate approach," Energy Economics, Elsevier, vol. 15(2), pages 137-150, April.
    21. Paresh Kumar Narayan, 2005. "The saving and investment nexus for China: evidence from cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1979-1990.
    22. Ayres, Robert & Voudouris, Vlasios, 2014. "The economic growth enigma: Capital, labour and useful energy?," Energy Policy, Elsevier, vol. 64(C), pages 16-28.
    23. Yu, Eden S. H. & Hwang, Been-Kwei, 1984. "The relationship between energy and GNP : Further results," Energy Economics, Elsevier, vol. 6(3), pages 186-190, July.
    24. Sadorsky, Perry, 2011. "Trade and energy consumption in the Middle East," Energy Economics, Elsevier, vol. 33(5), pages 739-749, September.
    25. Al-Iriani, Mahmoud A., 2006. "Energy-GDP relationship revisited: An example from GCC countries using panel causality," Energy Policy, Elsevier, vol. 34(17), pages 3342-3350, November.
    26. Stern, David I., 2000. "A multivariate cointegration analysis of the role of energy in the US macroeconomy," Energy Economics, Elsevier, vol. 22(2), pages 267-283, April.
    27. Ghali, Khalifa H. & El-Sakka, M. I. T., 2004. "Energy use and output growth in Canada: a multivariate cointegration analysis," Energy Economics, Elsevier, vol. 26(2), pages 225-238, March.
    28. Mohammadi, Hassan & Parvaresh, Shahrokh, 2014. "Energy consumption and output: Evidence from a panel of 14 oil-exporting countries," Energy Economics, Elsevier, vol. 41(C), pages 41-46.
    29. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    30. Yildirim, Ertugrul & Aslan, Alper, 2012. "Energy consumption and economic growth nexus for 17 highly developed OECD countries: Further evidence based on bootstrap-corrected causality tests," Energy Policy, Elsevier, vol. 51(C), pages 985-993.
    31. Narayan, Paresh Kumar & Smyth, Russell, 2009. "Multivariate granger causality between electricity consumption, exports and GDP: Evidence from a panel of Middle Eastern countries," Energy Policy, Elsevier, vol. 37(1), pages 229-236, January.
    32. Alshehri, Abdullah & Hussain, Ahmad & Mobarak, Youssef, 2014. "Energy-conversion measures in the industries of Saudi Arabia and development of methodology for certification of energy personnel in the Kingdom," Energy Policy, Elsevier, vol. 64(C), pages 203-208.
    33. Talha Yalta, A. & Cakar, Hatice, 2012. "Energy consumption and economic growth in China: A reconciliation," Energy Policy, Elsevier, vol. 41(C), pages 666-675.
    34. Abbasinejad Hossein & Gudarzi Farahani Yazdan & Asghari Ghara Ehsan, 2012. "The relationship between energy consumption, energy prices and economic growth: case study (OPEC countries)," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 36(3), pages 272-286, September.
    35. Lee, Chien-Chiang & Chang, Chun-Ping & Chen, Pei-Fen, 2008. "Energy-income causality in OECD countries revisited: The key role of capital stock," Energy Economics, Elsevier, vol. 30(5), pages 2359-2373, September.
    36. Elliott, Graham & Rothenberg, Thomas J & Stock, James H, 1996. "Efficient Tests for an Autoregressive Unit Root," Econometrica, Econometric Society, vol. 64(4), pages 813-836, July.
    37. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    38. V N Balasubramanyam & M Salisu & David Sapsford, "undated". "Foreign Direct Investment and Growth: New Hypotheses and Evidence," Working Papers ec7/96, Department of Economics, University of Lancaster.
    39. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    40. Squalli, Jay, 2007. "Electricity consumption and economic growth: Bounds and causality analyses of OPEC members," Energy Economics, Elsevier, vol. 29(6), pages 1192-1205, November.
    41. Sari, Ramazan & Ewing, Bradley T. & Soytas, Ugur, 2008. "The relationship between disaggregate energy consumption and industrial production in the United States: An ARDL approach," Energy Economics, Elsevier, vol. 30(5), pages 2302-2313, September.
    42. Pirlogea, Corina & Cicea, Claudiu, 2012. "Econometric perspective of the energy consumption and economic growth relation in European Union," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(8), pages 5718-5726.
    43. Soytas, Ugur & Sari, Ramazan, 2007. "The relationship between energy and production: Evidence from Turkish manufacturing industry," Energy Economics, Elsevier, vol. 29(6), pages 1151-1165, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ahmed Bilal Awan & Muhammad Zubair & Praveen R. P. & Ahmed G. Abokhalil, 2018. "Solar Energy Resource Analysis and Evaluation of Photovoltaic System Performance in Various Regions of Saudi Arabia," Sustainability, MDPI, vol. 10(4), pages 1-27, April.
    2. Gaoke Liao & Zhenghui Li & Ziqing Du & Yue Liu, 2019. "The Heterogeneous Interconnections between Supply or Demand Side and Oil Risks," Energies, MDPI, vol. 12(11), pages 1-17, June.
    3. Abdul Mujeebu, Muhammad & Alshamrani, Othman Subhi, 2016. "Prospects of energy conservation and management in buildings – The Saudi Arabian scenario versus global trends," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1647-1663.
    4. K, Ashin Nishan M & ASHIQ, MUHAMMED V, 2019. "Role of Energy use in the Prediction of CO2 Emissions and Growth in India: An Application of Artificial Neural Networks (ANN)," SocArXiv gkpbu, Center for Open Science.
    5. Mounir Belloumi & Atef Alshehry, 2018. "The Impacts of Domestic and Foreign Direct Investments on Economic Growth in Saudi Arabia," Economies, MDPI, vol. 6(1), pages 1-17, March.
    6. Mohammed AlKhars & Fazlul Miah & Hassan Qudrat-Ullah & Aymen Kayal, 2020. "A Systematic Review of the Relationship Between Energy Consumption and Economic Growth in GCC Countries," Sustainability, MDPI, vol. 12(9), pages 1-43, May.
    7. Henrique Oliveira & Víctor Moutinho, 2021. "Renewable Energy, Economic Growth and Economic Development Nexus: A Bibliometric Analysis," Energies, MDPI, vol. 14(15), pages 1-28, July.
    8. Majed S. Almozaini, 2019. "The Causality Relationship between Economic Growth and Energy Consumption in The World s top Energy Consumers," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 40-53.
    9. Charfeddine, Lanouar, 2017. "The impact of energy consumption and economic development on Ecological Footprint and CO2 emissions: Evidence from a Markov Switching Equilibrium Correction Model," Energy Economics, Elsevier, vol. 65(C), pages 355-374.
    10. Rami Alamoudi & Osman Taylan & Mehmet Azmi Aktacir & Enrique Herrera-Viedma, 2021. "Designing a Solar Photovoltaic System for Generating Renewable Energy of a Hospital: Performance Analysis and Adjustment Based on RSM and ANFIS Approaches," Mathematics, MDPI, vol. 9(22), pages 1-24, November.
    11. Hasna Khemili & Mounir Belloumi, 2018. "Cointegration Relationship between Growth, Inequality and Poverty In Tunisia," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 2(1), pages 8-18.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Abbas Ali Chandio & Yuansheng Jiang & Jam Ghulam Murtaza Sahito & Fayyaz Ahmad, 2019. "Empirical Insights into the Long-Run Linkage between Households Energy Consumption and Economic Growth: Macro-Level Empirical Evidence from Pakistan," Sustainability, MDPI, vol. 11(22), pages 1-17, November.
    2. Atef Saad Alshehry & Mounir Belloumi, 2014. "Investigating the Causal Relationship between Fossil Fuels Consumption and Economic Growth at Aggregate and Disaggregate Levels in Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 4(4), pages 531-545.
    3. Alshehry, Atef Saad & Belloumi, Mounir, 2015. "Energy consumption, carbon dioxide emissions and economic growth: The case of Saudi Arabia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 237-247.
    4. Smyth, Russell & Narayan, Paresh Kumar, 2015. "Applied econometrics and implications for energy economics research," Energy Economics, Elsevier, vol. 50(C), pages 351-358.
    5. Shyh-Wei Chen & Zixiong Xie & Ying Liao, 2018. "Energy consumption promotes economic growth or economic growth causes energy use in China? A panel data analysis," Empirical Economics, Springer, vol. 55(3), pages 1019-1043, November.
    6. Tiba, Sofien & Omri, Anis, 2017. "Literature survey on the relationships between energy, environment and economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 1129-1146.
    7. Zhang, Wei & Yang, Shuyun, 2013. "The influence of energy consumption of China on its real GDP from aggregated and disaggregated viewpoints," Energy Policy, Elsevier, vol. 57(C), pages 76-81.
    8. Camarero, Mariam & Forte, Anabel & Garcia-Donato, Gonzalo & Mendoza, Yurena & Ordoñez, Javier, 2015. "Variable selection in the analysis of energy consumption–growth nexus," Energy Economics, Elsevier, vol. 52(PA), pages 207-216.
    9. Jaganath Behera, 2015. "Examined the Energy-Led Growth Hypothesis in India: Evidence from Time Series Analysis," Energy Economics Letters, Asian Economic and Social Society, vol. 2(4), pages 46-56, December.
    10. Ewing, Bradley T. & Payne, James E. & Caporin, Massimilano, 2022. "The Asymmetric Impact of Oil Prices and Production on Drilling Rig Trajectory: A correction," Resources Policy, Elsevier, vol. 79(C).
    11. Sofien, Tiba & Omri, Anis, 2016. "Literature survey on the relationships between energy variables, environment and economic growth," MPRA Paper 82555, University Library of Munich, Germany, revised 14 Sep 2016.
    12. Hasanov, Fakhri & Bulut, Cihan & Suleymanov, Elchin, 2017. "Review of energy-growth nexus: A panel analysis for ten Eurasian oil exporting countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 369-386.
    13. Paresh Narayan & Russell Smyth, 2014. "Applied Econometrics and a Decade of Energy Economics Research," Monash Economics Working Papers 21-14, Monash University, Department of Economics.
    14. Ozturk, Ilhan, 2010. "A literature survey on energy-growth nexus," Energy Policy, Elsevier, vol. 38(1), pages 340-349, January.
    15. Dakpogan, Arnaud & Smit, Eon, 2018. "The effect of electricity losses on GDP in Benin," MPRA Paper 89545, University Library of Munich, Germany.
    16. Lean, Hooi Hooi & Smyth, Russell, 2014. "Disaggregated energy demand by fuel type and economic growth in Malaysia," Applied Energy, Elsevier, vol. 132(C), pages 168-177.
    17. Md. Shahiduzzaman & Khorshed Alam, 2014. "A reassessment of energy and GDP relationship: the case of Australia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(2), pages 323-344, April.
    18. Santos, Carlos Filipe & Fuinhas, José Alberto & Marques, António Cardoso, 2014. "O nexus energia-crescimento e o nível da auto-suficiência na produção de petróleo: análise com macro painel [Energy-growth nexus and oil self-sufficiency: macro panel analysis]," MPRA Paper 57008, University Library of Munich, Germany.
    19. Shahbaz, Muhammad & Sarwar, Suleman & Chen, Wei & Malik, Muhammad Nasir, 2017. "Dynamics of electricity consumption, oil price and economic growth: Global perspective," Energy Policy, Elsevier, vol. 108(C), pages 256-270.
    20. Chor Foon Tang and Eu Chye Tan, 2012. "Electricity Consumption and Economic Growth in Portugal: Evidence from a Multivariate Framework Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:7:y:2015:i:5:p:5153-5170:d:48811. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.