Exploring the dynamic relationship between economic globalization and energy consumption in raising green growth: Evidence from the MENA region using CS-ARDL and PMG analysis

Abstract

The aim of this paper is to analyze the dynamic relationship between economic globalization, energy consumption, and green growth in MENA countries, focusing on the dual role of globalization as a driver of sustainable development and as a source of environmental issues. Using panel data for 14 MENA countries covering the period 1995–2024, the study applies advanced econometric specifications, namely Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL), Pooled Mean Group (PMG), and Generalized Method of Moments (GMM). These methods control for cross-sectional dependence and heterogeneity and capture both short- and long-term dynamics. The results reveal that economic globalization positively influences green growth in the long run through technology transfer, foreign direct investment, and policy diffusion. However, fossil fuel-based energy consumption negatively impacts green growth in both the short and long term. Adoption of renewable energy, institutional quality, and economic growth positively contribute to green growth outcomes. The error correction terms confirm the existence of a strong long-term equilibrium relationship. The paper concludes that while globalization can be harnessed to promote sustainable development, its benefits are undermined by over-dependence on fossil fuel energy in the MENA region. A transition towards renewable energy and stronger institutional mechanisms are necessary to ensure globalization contributes positively to environmental sustainability. Policymakers should prioritize investments in renewable energy, unify governance structures, and incorporate environmental standards into trade and globalization policies. By doing so, MENA countries will be better positioned to balance economic integration with environmental protection and achieve sustainable green growth.