Environment, Development and Sustainability

, Volume 20, Issue 3, pp 1053–1066 | Cite as

Road energy consumption, economic growth, population and urbanization in Egypt: cointegration and causality analysis

  • Dalia M. IbrahiemEmail author


The study investigates the causal relationships between road energy consumption, economic growth, urbanization and population growth in Egypt over the period (1980–2011). I use Johansen cointegration approach, vector error correction model (VECM), generalized impulse response functions and variance decomposition technique. The results show the existence of long-run relationship between the variables. Moreover, the results indicate the existence of unidirectional long-run causality running from road energy consumption to urbanization and from road energy consumption to economic growth which implies the existence of growth hypothesis in the long run. Also, there is bidirectional short-run causality between road energy consumption and economic growth, which indicates the existence of feedback hypothesis in the short run. These results imply that road energy consumption determines economic growth in the both short run and long run and economic growth causes road energy consumption in the short run. And according to these results, several policy implications will be suggested for policymakers. They should take into consideration while implementing energy conservation policies, the possible negative effect on economic growth and have to concentrate on technological development policies and to make a shift towards using clean alternative fuel as natural gas and focus on investment in renewable energy resources.


Road energy consumption Urbanization Economic growth Population 


  1. Acaravci, A., & Ozturk, I. (2010). On the relationship between energy consumption, CO2 emissions and economic growth in Europe. Energy, 35(12), 5412–5420. doi: 10.1016/ Scholar
  2. Achour, H., & Belloumi, M. (2016). Investigating the causal relationship between transport infrastructure, transport energy consumption and economic growth in Tunisia. Renewable Sustainable Energy Reviews, 56, 988–998. doi: 10.1016/j.rser.2015.12.023.CrossRefGoogle Scholar
  3. Ahmed, W., Zaman, K., Sadaf Taj, S., Rustam, R., Waseem, M., & Shabir, M. (2013). Economic growth and energy consumption nexus in Pakistan. South Asian Journal of Global Business Research, 2(2), 251–275. doi: 10.1108/SAJGBR-05-2011-0010.CrossRefGoogle Scholar
  4. Alam, A. (2013). Electric power consumption, foreign direct investment and economic growth. World Journal of Science, Technology and Sustainable Development, 10(1), 55–65. doi: 10.1108/20425941311313100.CrossRefGoogle Scholar
  5. Al-mulali, U., Fereidouni, H. G., Lee, J. Y. M., & Sab, C. N. B. (2013). Exploring the relationship between urbanization, energy consumption and CO2 emissions in MENA countries. Renewable and Sustainable Energy Reviews, 23, 107–112. doi: 10.1016/j.rser.2013.02.041.CrossRefGoogle Scholar
  6. Ang, J. B. (2007). CO2 emissions, energy consumption and output in France. Energy Policy, 35(10), 4772–4778. doi: 10.1016/j.enpol.2007.03.032.CrossRefGoogle Scholar
  7. Aslan, A., Apergis, N., & Yildirim, S. (2014). Causality between energy consumption and GDP in the US: Evidence from wavelet analysis. Front Energy, 8(1), 1–8. doi: 10.1007/s11708-013-0290-6.CrossRefGoogle Scholar
  8. Azam, M., Khan, A. Q., Bakhtyar, B., & Emirullah, C. (2015). The causal relationship between energy-consumption and economic growth in the ASEAN-5 countries. Renewable and Sustainable Energy Reviews, 47, 732–745. doi: 10.1016/j.rser.2015.03.023.CrossRefGoogle Scholar
  9. Banafea, W. A. (2014). Structural breaks and causality relationship between economic growth and energy consumption in Saudi Arabia. International Journal of Energy Economics and Policy, 4(4), 726–734.Google Scholar
  10. Bekhet, H. A., & Othman, N. S. (2011). Causality analysis among electricity consumption, consumer expenditure, gross domestic product (GDP) and foreign direct investment (FDI): Case study of Malaysia. Journal of Economics and International Finance, 3(4), 228–235.
  11. Belloumi, M. (2009). Energy consumption and GDP in Tunisia: Cointegration and causality analysis. Energy Policy, 37(7), 2745–2753. doi: 10.1016/j.enpol.2009.03.027.CrossRefGoogle Scholar
  12. Ben Abdallah, K., Belloumi, M., & De Wolf, D. (2013). Indicators for sustainable energy development: A multivariate cointegration and causality analysis from Tunisian road transport sector. Renewable Sustainable Energy Reviews, 25, 34–43. doi: 10.1016/j.rser.2013.03.066.CrossRefGoogle Scholar
  13. Central Agency for Public Mobilization & Statistics (CAPMAS). (2016). Egypt in figures, Arab Republic of Egypt.Google Scholar
  14. Chandran, V. G. R., & Tang, C. F. (2013). The impacts of transport energy consumption foreign direct investment and income on CO2 emissions in ASEAN-5 economies. Renewable and Sustainable Energy Reviews, 24, 445–453. doi: 10.1016/j.rser.2013.03.054.CrossRefGoogle Scholar
  15. Costantini, V., & Martini, C. (2010). The causality between energy consumption and economic growth: A multi-sectoral analysis using non-stationary cointegrated panel data. Energy Economics, 32(3), 591–603.CrossRefGoogle Scholar
  16. Economic and Social Commission for Western Asia (ESCWA). (2014). Policy reforms to promote energy efficiency in the transportation sector in Egypt.Google Scholar
  17. EIA (US Energy Information Administration). (2015). International Energy Statistics. Available online at:
  18. El-Dorghamy, A., Allam, H., Al-Abyad, A., & Gasnier, M. (2015). Fuel economy and CO 2 emissions of light duty vehicles in Egypt. Al Matar: Centre for Environment and Development in the Arab Region and Europe.Google Scholar
  19. Engle, R., & Granger, C. (1987). Cointegration and error correction: representation, estimation and testing. Econometrica, 55(2), 251–276.CrossRefGoogle Scholar
  20. Fedderke J. W., & Bogeti Z. (2006). Infrastructure and growth in South Africa: Direct and indirect productivity. Impacts of 19 infrastructure measures. World Bank Policy Research Working Paper 3989.Google Scholar
  21. Halicioglu, F. (2007). Residential electricity demand dynamics in Turkey. Energy Economics, 29(2), 199–210. doi: 10.1016/j.eneco.2006.11.007.CrossRefGoogle Scholar
  22. Halicioglu, F. (2009). An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey. Energy Policy, 37(2), 1156–1164. doi: 10.1016/j.enpol.2008.11.012.CrossRefGoogle Scholar
  23. Hossain, Md S. (2011). Panel estimation for CO2 emissions, energy consumption, economic growth, trade openness and urbanization of newly industrialized countries. Energy Policy, 39(11), 6991–6999. doi: 10.1016/j.enpol.2011.07.042.CrossRefGoogle Scholar
  24. Howeidy, A. (2009). Cairo’s informal areas between urban challenge and hidden potentials, facts, voices, visions. Criterio Produca Grafica, Lda. Portugal.Google Scholar
  25. Hwang, J. H., & Yoo, S. H. (2014). Energy consumption, CO2 emissions, and economic growth: Evidence from Indonesia. Quality & Quantity, 48(1), 63–73. doi: 10.1007/s11135-012-9749-5.CrossRefGoogle Scholar
  26. Iwata, H., Okada, K., & Samreth, S. (2010). Empirical study on the environmental Kuznets curve for CO2 in France: The role of nuclear energy. Energy Policy, 38(8), 4057–4063. doi: 10.1016/j.enpol.2010.03.031.CrossRefGoogle Scholar
  27. Johansen, S. (1988). Statistical analysis of cointegrating vectors. Journal of Economic Dynamics and Control, 12(2–3), 231–254.CrossRefGoogle Scholar
  28. Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration with applications, the demand for money. Oxford Bulletin of Economics and Statistics, 52(2), 169–210.CrossRefGoogle Scholar
  29. Joyeux, R., & Ripple, R. D. (2011). Energy consumption and real income: A panel cointegration multi-country study. Energy Journal, 32(2), 107–141.CrossRefGoogle Scholar
  30. Kargi, B. (2014). Electicity consumption and Economic growth: A long-term co-integrated analysis for Turkey. International Journal of Economics and Finance, 6(4), 285–293. doi: 10.5539/ijef.v6n4p285.CrossRefGoogle Scholar
  31. Kraft, J., & Kraft, A. (1978). On the relationship between energy and GNP. Journal of Energy and Development, 3(2), 401–403.Google Scholar
  32. Kyophilavong, P., Shahbaz, M., Anwar, S., & Masood, S. (2015). The energy-growth nexus in Thailand: Does trade openness boost up energy consumption? Renewable and Sustainable Energy Reviews, 46, 265–274. doi: 10.1016/j.rser.2015.02.004.CrossRefGoogle Scholar
  33. Liddle, B. (2009). Long-run relationship among transport demand, income, and gasoline price for the US. Transportation Research Part D, 14(2), 73–82. doi: 10.1016/j.trd.2008.10.006.CrossRefGoogle Scholar
  34. Liddle, B. (2012). The systematic, long-run relation among gasoline demand, gasoline price income and vehicle ownership in OECD countries: Evidence from panel cointegration and causality modeling. Transportation Research Part D, 17(4), 327–331. doi: 10.1016/j.trd.2012.01.007.CrossRefGoogle Scholar
  35. Liddle, B. (2014). Impact of population, age structure, and urbanization on carbon emissions/energy consumption: Evidence from macro-level, cross-country analyses. Population and Environment, 35(3), 286–304. doi: 10.1007/s11111-013-0198-4.CrossRefGoogle Scholar
  36. Liddle, B., & Lung, S. (2013). The long-run causal relationship between transport energy consumption and GDP: Evidence from heterogeneous panel methods robust to cross-sectional dependence. Economics Letters, 121(3), 524–527. doi: 10.1016/j.econlet.2013.10.011.CrossRefGoogle Scholar
  37. Liddle, B., & Lung, S. (2014). Might electricity consumption cause urbanization instead? Evidence from heterogeneous panel long-run causality tests. Global Environmental Change, 24, 42–51. doi: 10.1016/j.gloenvcha.2013.11.013.CrossRefGoogle Scholar
  38. Liddle, B., & Lung, S. (2015). Revisiting energy consumption and GDP causality: Importance of a priori hypothesis testing, disaggregated data and heterogeneous panels. Applied Energy, 142, 44–55. doi: 10.1016/j.apenergy.2014.12.036.CrossRefGoogle Scholar
  39. Lin, B., & Jr, P. K. (2014). Energy consumption and economic growth in South Africa reexamined: A non-parametric testing approach. Renewable and Sustainable Energy Reviews, 40, 840–850. doi: 10.1016/j.rser.2014.08.005.CrossRefGoogle Scholar
  40. Liu, Y. (2009). Exploring the relationship between urbanization and energy consumption in China using ARDL(autoregressive distributed lag) and FDM (factor decomposition model). Energy, 34(11), 1846–1854. doi: 10.1016/ Scholar
  41. Masih, A. M. M., & Masih, R. (1996). Energy consumption, real income and temporal causality: Results from a multi-country study based on cointegration and error correction modelling techniques. Energy Economics, 18(3), 165–183.CrossRefGoogle Scholar
  42. Narayan, P. K., & Popp, S. (2012). The energy consumption-real GDP nexus revisited: Empirical evidence from 93 countries. Economic Modelling, 29(2), 303–308. doi: 10.1016/j.econmod.2011.10.016.CrossRefGoogle Scholar
  43. Narayan, P. K., & Smyth, R. (2008). Energy consumption and real GDP in G7 countries: New evidence from panel cointegration with structural breaks. Energy Economics, 30(5), 2331–2341. doi: 10.1016/j.eneco.2007.10.006.CrossRefGoogle Scholar
  44. Pala, A. (2016). Which energy growth hypothesis is valid in OECD countries? Evidence from panel causality analysis. International Journal of Energy Economics and Policy, 6(1), 28–34.Google Scholar
  45. Pradhan, R. P. (2010). Transport infrastructure, energy consumption and economic growth triangle in India: Cointegration and causality analysis. Journal of Sustainable Development, 3(2), 167–173.CrossRefGoogle Scholar
  46. Pradhan, R. P., & Tapan, P. B. (2013). Effect of transportation infrastructure on economic growth in India: The VECM approach. Research in Transportation Economics, 38(1), 139–148. doi: 10.1016/j.retrec.2012.05.008.CrossRefGoogle Scholar
  47. Rafiq, S., & Salim, R. (2009). Temporal causality between energy consumption and income in six Asian emerging countries. Applied Economics Quarterly, 55(4), 1–16. doi: 10.3790/aeq.55.4.335.CrossRefGoogle Scholar
  48. Ragab, A., & Fouad, H. (2009). Roads and highways in Egypt: Reform for enhancing efficiency. The Egyptian Center for Economic Studies, Working paper No. 152.Google Scholar
  49. Ramanathan, R. (2001). The long-run behavior of transport performance in India: A cointegration approach. Transportation Research Part A, 35(4), 309–320.Google Scholar
  50. Saboori, B., Sapri, M., & Baba, M. (2014). Economic growth, energy consumption and CO2 emissions in OECD (Organization for Economic Co-operation and Development)’s transport sector: A fully modified bi-directional relationship approach. Energy, 66, 140–161. doi: 10.1016/ Scholar
  51. Salim, R., & Bloch, H. (2009). Expenditures on business R&D and trade performance in Australia: Is there a link? Applied Economics, 41, 351–361. doi: 10.1080/00036840601007302.CrossRefGoogle Scholar
  52. Salim, R., Rafiq, S., & Hassan, A. F. M. K. (2008). Causality and dynamics of energy consumption and output: Evidence from non-OECD Asian countries. Journal of Economic Development, 33, 1–26.Google Scholar
  53. Samimi, R. (1995). Road transport energy demand in Australia: A cointegration approach. Energy Economics, 17(4), 329–339.CrossRefGoogle Scholar
  54. Shahbaz, M., Loganathan, N., Muzaffar, A. T., Ahmed, K., & Jabran, M. A. (2016). How urbanization affects CO2 emissions in Malaysia? The application of STIRPAT model. Renewable and Sustainable Energy Reviews, 57, 83–93. doi: 10.1016/j.rser.2015.12.096.CrossRefGoogle Scholar
  55. Solarin, S. A., & Shahbaz, M. (2013). Trivariate causality between economic growth, urbanization and electricity consumption in Angola: Cointegration and causality analysis. Energy Policy, 60, 876–884. doi: 10.1016/j.enpol.2013.05.058.CrossRefGoogle Scholar
  56. Soytas, U., Sari, R., & Ozdemir, O. (2001). Energy consumption and GDP relations in Turkey: A cointegration and vector error correction analysis, economies and business in transition. In Facilitating competitiveness and change in the global environment proceedings (pp. 838–844). Global Business and Technology Association.Google Scholar
  57. Tang, C. F. (2009). Electricity consumption, income, foreign direct investment, and population in Malaysia: New evidence from multivariate framework analysis. Journal of Economic Studies, 36(4), 371–382. doi: 10.1108/01443580910973583.CrossRefGoogle Scholar
  58. The World Bank. (2015). World development indicators (WDI), Washington, DC [Online]. Accessed June 26, 2015.
  59. United Nations Statistics Division (unstats), 2014 Energy Balances. United Nations, New York, 2016.
  60. World Energy Council. (2011). Global transport scenarios 2050.
  61. Yazdi, S. K., & Shakouri, B. (2014). The impact of energy consumption, income, trade, urbanization and financial development on carbon emissions in Iran. Advances in Environmental Biology., 8(5), 1293–1300.Google Scholar
  62. Yu, E. S. H., & Choi, J. Y. (1985). The causal relationship between energy and GNP: An international comparison. Journal of Energy and Development, 10(2), 249–272.Google Scholar
  63. Zhang, C., & Lin, Y. (2012). Panel estimation for urbanization, energy consumption and CO2 emissions: A regional analysis in China. Energy Policy, 49, 488–498. doi: 10.1016/j.enpol.2012.06.048.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2017

Authors and Affiliations

  1. 1.Faculty of Economics and Political ScienceCairo UniversityGizaEgypt

Personalised recommendations