Crude oil, natural gas, politics, and economic growth: Impact and causality analysis in Caspian Sea region

The main objective of this study is to investigate the impact and causality of crude oil and natural gas with economic growth in Caspian Sea region. Alongside, analyzing the impact and causality of regional politics with crude oil and natural gas, and investigating the internal strengths and weaknesses as well as external opportunities and threats of the region are also the significant purposes of the study. Here, the study uses ordinary least square method and Granger causality test by considering time-series data from 1997-2015 to ascertain the impact and causality of crude oil, natural gas, politics, and economic growth. The results show that crude oil and natural gas has a significant impact on economic growth of the region. However, no significant regression model has been found considering the political variables which jointly has a significant impact on crude oil and natural gas. Now, considering Granger causality, from the economic perspective, GDP does granger cause crude oil price and export. It denotes that there is a unidirectional causal relationship between GDP and crude oil price, and GDP and crude oil export. Surprisingly, this direction is unlike for GDP and natural gas. Here, GDP and natural gas have opposite but unidirectional causal relationship—i.e., natural gas price and export do Granger cause GDP. On the other hand, considering political perspective, the findings of the Granger causality test show seven pairs which have a unilateral significant causal relationship between them.