Energy as a driver of growth in oil exporting countries?

This paper is a contribution to the on-going debate over whether there is a relationship between energy consumption and economic growth. Although the oil exporting countries are among the most energy-intensive economies in the world, little attention has been paid to the features of their energy consumption. Therefore, this study empirically investigates the two variables dynamic relationship in 12 oil exporting countries from 1990 to 2010. Using recently developed panel econometric techniques, the present paper accounts for cross-section dependence and structural breaks when analysing the energy-income nexus. The results of this study indicate that there exists a long-run equilibrium relationship between energy consumption and economic growth. Furthermore, the empirical evidence of a dynamic panel error-correction model reveals a short-run unidirectional causality from energy consumption to economic growth, whereas in the long-run, it is the economic process that determines the energy consumption trend.