Economic development and energy consumption in Saudi Arabian economy: do globalization, financial development and capital accumulation matter?
International Journal of Energy Sector Management
ISSN: 1750-6220
Article publication date: 15 December 2023
Abstract
Purpose
This paper aims to empirically examine the impact of economic development and energy consumption in Saudi Arabia (the leading OPEC giant and the Arab energy icon country) between 1971 and 2015, whilst incorporating globalization, financial development and capital accumulation.
Design/methodology/approach
This study uses econometric tools and the analytical framework based on the autoregressive distributed lag (ARDL) model.
Findings
The study found that, unlike economic development, globalization and financial development increased energy consumption. Also, capital accumulation created a boost in the country’s energy consumption. Results of variance decomposition indicate that the innovative shocks in globalization and financial development affected energy consumption at the rates of 15.28% and 28.98%, respectively, over 15 years’ period, while shocks in capital accumulation affected energy consumption at a rate of only about 1.24%. In addition, the results of impulse response function show that globalization and economic development were highly responsive to shocks in financial development, and capital accumulation greatly spurred financial development.
Research limitations/implications
The findings of this study have implication for promoting an efficient and sustainable energy systems that enhance sustainable development based on the accrued benefits of globalization, financial development and capital accumulation.
Originality/value
Given the increasing level of globalization, financial development and energy consumption, our study uses econometric tools and the analytical framework based on the ARDL model to revisit how energy consumption is influenced by economic development in Saudi Arabia by incorporating other determinants of energy consumption such as globalization, financial development and capital accumulation. The results were validated based on the innovative accounting.
Keywords
Acknowledgements
Since submision of this article, the following author have updated their affiliations: Aliyu Buhari Isah is at the Department of Accounting, Finance, and Economics, University of Lincoln, Lincoln, UK and Ojonugwa Usman is at the Adnan Kassar School of Business, Lebanese American University, Beirut, Lebanon and Research Center of Development Economics, Azerbaijan State University of Economics (UNEC), Baku, Azerbaijan.
Citation
Rafindadi, A.A., Isah, A.B. and Usman, O. (2023), "Economic development and energy consumption in Saudi Arabian economy: do globalization, financial development and capital accumulation matter?", International Journal of Energy Sector Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJESM-07-2023-0026
Publisher
:Emerald Publishing Limited
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