The Determination of Panel Causality Analysis on the Relationship between Economic Growth and Primary Energy Resources Consumption of Turkey and Central Asian Turkish Republics

Energy is an important factor effecting the economic development of the countries. The energy dependence is increasing with economic growth. This relationship between growth and energy consumption is especially important for energy dependent countries. Sustainable economic growth is dependent on meeting the increasing energy demand at the same rate. Relationship between energy and economic growth plays a key role in the creation of the countries’ energy policies. In a further aspect, if there is no relationship between energy consumption and growth, the possibility of negative impact of energy conservation policies on the growth, such as energy tax, energy saving policy, energy pricing policy, is eliminated. Therefore, limited energy resources against increasing energy need of the countries, foreign-source dependency for energy of many countries and environmental/ecological factors in the production, bring the energy issues more important and sensitive position. In this respect, the determination of relationship between economic consumption and economic growth in terms of both Turkey's foreign-source dependency for the primary energy sources (coal, oil, gas), and Central Asia Turkish Republics’ rich hydrocarbon resources and geopolitical position is the focus of this study.In this context, this paper aims to investigate the relationship between energy consumption and economic growth in seven countries during the period of 1992–2012. For this purpose, it is analyzed cointegration and long-run causality relationship between these variables by adopting a Vector Error Correction Model for cointegrated panel data with Turkey, Azerbaijan, Kazakhstan, Turkmenistan, Tajikistan, Uzbekistan and Kyrgyzstan.