Investigating the Impact of Growth of Petroleum Products Consumption on Economic Development with a Systematic Dynamics Approach in Developing Countries

Hossein-Ali Fakher () and Seyed Ahmad Goldansaz ()
Additional contact information
Hossein-Ali Fakher: Department of Energy Economy, Faculty of Environment and Energy, Science and Research branch, Islamic Azad University, Tehran, Iran.
Seyed Ahmad Goldansaz: Department of Energy Economy, Faculty of Environment and Energy, Science and Research branch, Islamic Azad University, Tehran, Iran.

Iranian Economic Review (IER), 2015, vol. 19, issue 3, 279-293

Abstract: In addition to labor force and capital, energy plays a significant role in the production of commodities and services. Energy is the driving force of production activities. Therefore, it is an essential ingredient of growth and development. Results obtained from this paper show that the growth of oil products consumption has a positive effect on economic development via two channels: Firstly, increase of oil products consumption results in an increase of the profit of firms’ consumption, and subsequently, increase of firms’ motivation leads to more application of advanced equipment and high technologies and, ultimately, enhancement of development. Secondly, increase of oil products consumption leads to an increase in the employment of labor force, and subsequently, an increase of capital and investing equipment; this will ultimately be followed by the improvement of development. At last, this development turns into a factor for the higher usage of oil products aiming at higher production and profits. Also, in this paper, we present four hypotheses about the relationship between energy consumption and economic growth, including: Growth Hypothesis, Conservation Hypothesis, Feedback Hypothesis, and Null Hypothesis. The results show that Conservation Hypothesis and Null Hypothesis are rejected, but Growth Hypothesis and Feedback Hypothesis are accepted for Iran and the countries which have a significant dependence on energy.

Keywords: Oil Products Consumption; Economic Development; Systematic Dynamics Method. (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
ftp://80.66.179.253/eut/journl/20153-3.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eut:journl:v:19:y:2015:i:3:p:279

Access Statistics for this article

Iranian Economic Review (IER) is currently edited by Dr.Hossien Abbasinejad

More articles in Iranian Economic Review (IER) from Faculty of Economics,University of Tehran.Tehran,Iran Contact information at EDIRC.
Bibliographic data for series maintained by [z.rahimalipour] ().