Impact of fuel subsidies on economic growth in energy-exporting countries: analysis with panel data

Samir, Laissouf; Kamel, Lahouel

doi:10.2478/ers-2025-0004

Abstract

Subject and purpose of work

This study aims to measure the impact of fuel subsidy on economic growth in 2010-2020.

Materials and methods

The panel model was used in the study to calculate the variables of fuel subsidies as a percentage of GDP and annual GDP growth per person for 11 energy producers and exporters.

Results

the study showed that fuel subsidies had a significant adverse effect on economic growth, with a 1% increase in fuel subsidies leading to a 0.19% drop in growth in the sample nations.

Conclusions

The findings are consistent with previous studies results and support the view that the policy of fuel subsidies hurts economic growth channels. This study attempted to measure fuel subsidies using the price GAP approach, which allows for estimating the levels of internal energy prices and specific reference prices, such as international energy prices or the price of production cost recovery.

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