Is the Relationship Between Clean/Non-clean Energy Consumption and Economic Growth Time-Varying? Non-parametric Evidence for MENA Region

We examine the impact of clean and non-clean energy consumptions on economic growth in the Middle East and Northern Africa (MENA) region. To do this, we test this relationship within a dynamic framework by tracing the time-varying evolution through employing non-parametric techniques. We also assess common and country-specific trend functions that allow them be evolved across time. Using annual data for 10 MENA countries over the period 1990–2020, we find that non-clean energy consumption was largely positive and strongly significant entire the whole period, while having a variable magnitude. Clean energy consumption was also positive and significant but exhibits two trends: a downward trend between the mid-1990s and 2002 and an upward trend after 2005. Moreover, our local non-parametric linear estimates show that the common and country-specific trend functions increase gradually in the earliest periods of the sample, but then, they stabilize after the global financial crisis. From our findings, it becomes evident that policymakers must adeptly navigate this transition phase, addressing initial hurdles and fostering an environment conducive to renewable investments. This approach is crucial to ensuring sustainable economic growth while preserving energy security in the MENA region.