Energy consumption, output and trade nexus in North Africa

This study uses panel cointegration techniques to examine the impact of energy consumption, and trade on economic growth for five North Africa countries within a multivariate framework over the period 1980-2009. Short-run dynamic relationship shows that there is evidence of one way short-run relationship from i) output, exports, and capital to imports, ii) fossil fuels consumption to exports, iii) exports to capital and iv) labor to combustible renewables and waste consumption. The vector error correction model shows that there is evidence of long-run relationship running from i) combustible renewables and waste consumption, fossil fuels consumption, exports, imports, capital, and labor to output, ii) fossil fuels consumption, exports, imports, capital, and labor to combustible renewables and waste consumption, and iii) combustible renewables and waste consumption, fossil fuels consumption, exports, capital, and labor to imports. The long-run elasticities show that combustible renewables and waste consumption is not statistically significant and only fossil fuels consumption can affect output while trade is statistically significant and have a negative impact on output through imports and positive impact through exports. The policy implication of these results is that, in these countries, trade openness is not sufficiently efficient to incite the use of energies for production.