Dynamic Convergence in Fossil Fuels Intensity: An Analysis of the Role of Urbanization and Technology in OPEC Countries

The OPEC countries are natural resource-based economies. The share of fossil fuels within the energy consumption of those countries is high. This paper aims to review the consumption pattern of fossil fuels in OPEC countries and test the convergence hypothesis in the consumption of fossil fuels including urbanization and technology in these countries. We used a dynamic panel data model with a GMM approach to testing absolutely and the conditional convergence within the consumption of fossil fuels for ۱۰ OPEC countries in the period of ۱۹۹۶-۲۰۱۳. We included the urbanization ratio, GDP growth, and trade (%GDP) within the model as control variables and therefore the test the hypothesis of conditional convergence. The results indicate that the hypothesis of absolute and conditional convergence in these countries wasn t rejected. Additionally, the results show that the urbanization ratio and economic process have a positive and significant effect, trade (%GDP) as a proxy for technology imports features a positive and significant effect on the consumption of fossil fuels. Considering the convergence in consumption of fossil fuels in OPEC countries, we propose cooperation among these countries to decrease the share of fossil fuels in energy consumption and to regulate CO۲ emissions.

Keywords:

Convergence , Fossil fuels , GMM , Technology , Urbanization ratio.