Abstract

The purpose of this research is to analyze the relationship between energy consumption and economic growth in Yemen during the period 1990–2012. It will also assess the impacts of changes in energy prices on aggregate energy consumption, and conclude with analyzing the relationship between efficiency (oil intensity of use) and total energy consumption during the same period. We used time series data to provide estimates of elasticities. Empirical results showed: (1) The impact of income on energy consumption is positive and was represented by the high elasticity. (2) The price-index has no significant effect on restraining total energy demand. (3) A significant effect of efficiency on energy consumption indicated by the high elasticity reported. This research concludes that both income and efficiency variables have significant impacts as expected on the demand for energy consumption in Yemen. As these two factors increase over time, energy consumption will increase and be more efficient for use which is consistent with the goals of economic growth and the sustainability of development in the future. The price, on the other hand, has no significant effect on restraining the demand for energy. Low energy prices will always increase its demand and bring into more inefficient use of energy. This implies that actions are essential for more sustainable development without adverse effects on national growth targets.

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