Tourism Development and Energy Transition in Gulf Cooperation Council Countries

The global energy transition requires countries to rapidly expand renewable energy infrastructure, yet the factors associated with this transition remain comparatively underexplored in resource-dependent economies. The Gulf Cooperation Council (GCC) represents a particularly important case: despite their substantial role in global hydrocarbon markets, they are simultaneously pursuing renewable energy expansion and economic diversification. Examining this transition therefore offers insights not only for the GCC but also for other hydrocarbon-dependent economies facing similar diversification challenges. This study examines, for the first time, the association between tourism development and renewable energy capacity share across six GCC countries from 2014 to 2024. Unlike most existing studies that use renewable energy consumption as the dependent variable, this study focuses on renewable energy capacity share, which more directly reflects long-term infrastructure investment and commitment to the energy transition. Using a balanced panel of 66 observations, the empirical analysis tests for cross-sectional dependence, applies the second-generation cross-sectionally augmented IPS (CIPS) unit root test, and estimates alternative panel specifications, with the fixed-effects model selected as the preferred specification based on the Hausman test. The results show that tourism receipts and foreign direct investment are positively and significantly associated with renewable energy capacity share, while GDP per capita shows no robust significant association. These findings highlight the potential relevance of tourism development and foreign investment to renewable energy expansion in hydrocarbon-dependent economies and provide policy-relevant evidence for countries seeking to align economic diversification with the energy transition.