Consideration the Relationship between Energy Consumption and Economic Growth in Oil Exporting Country

This paper studies the causal relationships between energy consumption and economic growth for OPEC countries. The results show that in the short-run, the Granger causality runs from income to energy consumption for Iran, Iraq, Qatar, United Arab Emirates and Saudi Arabia while for the rest of the OPEC countries the reverse i s true, i.e. the Granger causality runs from energy consumption to income. However, in the long run there is not any Granger causality relationship for all the OPEC countries. In the case of Qatar and the Saudi Arabia and Nigeria, energy, economic growth a nd prices aren’t mutually causal. Results show, that even for these countries which the energy consumption has an effect on economic growth, the effect is very minimal. The direction of causation between energy consumption and economic growth has significa nt policy implications. If there exists unidirectional Granger causality running from income to energy, it may be implied that energy conservation polic ies may be implemented with little adverse or no effects on economic growth.