The Impact of Energy Subsidy Polices on Gross Domestic Product Growth: Evidence from Emerging and Developing Economies

Authors

  • Abdelaziz Abdelmegid Ali Higher Institute of Administrative Sciences in Janaklees, Elbehera, Egypt,
  • Hamada Salah Youssef Faculty of Politics and Economics, Suez University, Egypt,
  • Ghada H. Ashour Economics and Finance Program, School of Business, University of Hertfordshire, Cairo, Egypt,
  • Mohamed Noureldin Sayed Pharaohs Higher Institute for Computer Information Systems and Management, Giza, Egypt.

DOI:

https://doi.org/10.32479/ijeep.24196

Keywords:

Energy Subsidies, Economic Growth, Panel Data

Abstract

This study examines the impact of energy subsidy policies on economic growth in ten emerging and developing economies: China, India, Russia, Egypt, Mexico, Indonesia, Algeria, Malaysia, Saudi Arabia, and Iran, during the period 2010–2024, using a Panel ARDL model estimated through the Pooled Mean Group (PMG) approach. The results show that energy subsidies have a positive, albeit limited, effect on GDP growth, with a 1% increase in subsidies raising GDP only by 0.011% in the long run and 0.009% in the short run. In contrast, gross fixed capital formation and population growth show much stronger positive effects, with elasticity coefficients of 0.99% and 1.19%, respectively. The findings suggest that while energy subsidies may stimulate economic activity in the short term, they are relatively ineffective in supporting long-term growth. Accordingly, the study recommends a gradual reform of energy subsidy policies, and the redirection of financial savings towards productive investment and renewable energy sectors, to enhance financial sustainability and support sustainable economic development.

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Published

2026-07-05

How to Cite

Ali, A. A., Youssef, H. S., Ashour, G. H., & Sayed, M. N. (2026). The Impact of Energy Subsidy Polices on Gross Domestic Product Growth: Evidence from Emerging and Developing Economies. International Journal of Energy Economics and Policy, 16(4), 123–131. https://doi.org/10.32479/ijeep.24196

Issue

Vol. 16 No. 4 (2026)

Section

Articles

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