The nexus between electricity consumption and economic growth in Bahrain

This paper explores the relationship between electricity consumption, foreign direct investment, capital and economic growth in the case of the Kingdom of Bahrain. The Cobb-Douglas production is used over the period of 1980Q1-2010Q4. We have applied the ARDL bounds testing approach and found that cointegration exists among the series. Electricity consumption, foreign direct investment and capital add in economic growth. The VECM Granger causality analysis has exposed the feedback effect between electricity consumption and economic growth and the same is true for foreign direct investment and electricity consumption. This study suggests government authorities to explore new sources of energy to achieve sustainable economic development for the long run.