The relationship between consumed energy, economic growth, and the environment in Egypt during the period (1980-2017) “An econometric study”

Document Type : Original Article

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Professor of Economics - Faculty of Economics and Political Science - Alexandria University

Abstract

This Study mainly aims at investigating the relationship between energy consumption, economic growth and environmental degradation in Egypt during the period (1980-2017). The study uses Vector Error Correction Model (VECM) to estimate the relationships between the variables and also to examine the existence of causal relationships among them in both the short run and long run. The empirical findings of the study reveal to the existence of interrelationship between energy consumption and environmental degradation and economic growth in the Egyptian Economy. Since energy consumption is considered as one of the main causes of environmental degradation phenomenon from one side, it is also considered as one of the main drivers of economic growth from the other side. The study concluded that energy conservation policies can exert adverse effects on economic growth in the long run in Egypt. The study recommends two policies to be carried out in parallel in order to solve this paradox; the first is to apply energy efficiency policies in all sectors of the economy which may help in reducing energy consumption without hindering economic growth. The second policy is to encourage exploiting new and renewable energy sources available in Egypt and increasing their contribution in the electricity generation mix in Egypt which may help in achieving sustainable economic growth and reducing environmental degradation simultaneously.  

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