Investigation of the Threshold Effect of Energy Security on Industrialization in Iran

Document Type : applicative

Authors

1 Asistant Professor, Department of Economics, Faculty of Literature and Humanities, University of ilam, Ilam, Iran. y

2 Master's student in Economics, Faculty of Literature and Humanities, Ilam University, Ilam, Iran.

10.30473/jier.2026.76102.1520

Abstract

Energy security refers to a country's ability to ensure a stable, reliable, and affordable supply of energy for its economy and society without facing major disruptions. This study examines the impact of energy security on industrialization in Iran using annual data from 1984 to 2022. An energy security index, based on five components—availability, acceptability, developability, accessibility, and affordability—was constructed using the Min-Max method. The Threshold Autoregressive model was then applied to investigate the effect of energy security on industrial value added. The results reveal two distinct energy security regimes (below and above the threshold of 51.57) in Iran’s economy, where the influence of variables on industrial value added follows different patterns in each regime. Fixed capital, foreign direct investment, and trade have a positive and significant impact on industrial value added in both regimes. Moreover, energy security itself has a significant effect in both regimes; however, after surpassing the threshold, its effect shifts from being a growth-limiting factor to a growth-promoting one. These findings suggest that enhancing energy security not only increases added industrial value but also contributes to sustainable industrial growth by improving capital efficiency, foreign investment, trade, and industrial productivity.

Keywords

Main Subjects

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Journal of Industrial Economics researches
Volume 9, Issue 32
December 2025
Pages 46-62

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History

  • Receive Date: 12 October 2025
  • Revise Date: 01 November 2025
  • Accept Date: 15 November 2025

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