The Impact of Primary Energy Consumption, Trade Openness and Foreign Direct Investment on Economic Growth: Evidence from MENA Countries

This research examined how primary energy use, trade openness, and foreign direct investment influence economic growth in seven selected countries in the MENA region. Based on data availability (Algeria, Egypt, Morocco, the United Arab Emirates, Saudi Arabia, Oman, and Qatar) from 2000 to 2023, using three methods: the Panel Pooled Mean Group-Autoregressive Distributed Lag Model (PMG-ARDL), the Panel Fully Modified Least Squares (FMOLS), and the Panel Dynamics Least Squares (DOLS) models to explore the long-term relationships between these factors. The estimation results for PMG-ARDL, Panel-FMOLS, and Panel-DOLS indicate that capital, the labour force, primary energy consumption, and trade openness all have a statistically significant positive impact on economic growth in the MENA region. Foreign direct investment has a statistically significant negative impact on economic growth in the MENA region. In general, these results simply indicate that capital, labour forces, energy consumption, and trade openness are the main drivers of long-term economic growth in the MENA region. The study suggests enhancing investment in human and physical capital, increasing trade openness, and focusing on energy efficiency to stimulate long-term economic growth while reevaluating policies for attracting foreign direct investment and ensuring their alignment with developmental priorities.