Energy and Sustainable Development Nexus: A Comparative ARDL-based Analysis of Saudi Arabia and Tunisia

Abstract

This study investigates the dynamics between energy use, trade openness, industrialization, technological innovation, and population density in shaping environmental sustainability in Saudi Arabia and Tunisia. Employing the Autoregressive Distributed Lag (ARDL) model, the research evaluates short- and long-term relationships using data from 1990 to 2022. Key findings reveal that Saudi Arabia's CO2 emissions are predominantly influenced by energy use and trade openness, underscoring the challenges of its fossil-fuel-reliant economy. Conversely, Tunisia demonstrates a faster adjustment to long-term equilibrium, with industrial modernization and trade-related factors reducing emissions. Population density impacts environmental outcomes differently across the two countries, reflecting the influence of urban planning and energy efficiency. These results emphasize the need for tailored sustainability policies, with Saudi Arabia focusing on renewable energy adoption and industrial policy reform, and Tunisia enhancing trade regulations and energy efficiency. This study fills a critical gap in comparative sustainability research in the MENA region by applying a cross-country ARDL model to assess the joint effects of trade, industrialization, technology, energy use, and population dynamics. By contrasting Saudi Arabia’s fossil-fuel dependency with Tunisia’s diversified economy, it highlights structural asymmetries in environmental outcomes and offers targeted policy insights for resource-diverse nations.