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

Abdelaziz Abdelmegid Ali (), Hamada Salah Youssef (), Ghada H. Ashour () and Mohamed Noureldin Sayed ()
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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.

International Journal of Energy Economics and Policy, 2026, vol. 16, issue 4, 123-131

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.

Keywords: Energy Subsidies; Economic Growth; Panel Data (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ2:v:16:y:2026:i:4:id:24196

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DOI: 10.32479/ijeep.24196

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