Revisiting the oil wealth- growth nexus: The role of economic norms in avoiding the oil curse

Brahim Bergougui; Mansoob Murshed

doi:10.1016/j.exis.2021.100929

Revisiting the oil wealth- growth nexus: The role of economic norms in avoiding the oil curse

Brahim Bergougui, Mansoob Murshed

Faculty of Business & Law (FBL)

Research Center in Applied Economics for Development

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

23 Downloads (Pure)

Abstract

This paper investigates how economic norms shape the relation between oil wealth and economic growth based on a dynamic model that accounts for endogeneity problems. To achieve that, we apply a system-GMM dynamic approach in 103 developing countries classified by their level of contract intensity, over the period 1970–2010. We find that controlling for contract intensity, is important in rendering the direction of the detrimental effects of oil wealth on economic growth. When economies are characterised by a low degree of contract intensity, oil wealth is not growth-enhancing. And when economies achieve a certain level or threshold of contract intensity, then they may become immune to the economic resource curse. In this connection we make an important contribution, by identifying a threshold level of contract intensity, above which the resource curse vanishes. Overall, our paper demonstrates that the oil related economic curse is not inevitable. The presence of contract intensive economic norms can alter a curse into a blessing, and we identify the point at which the switch takes place. This has important implications for policy design in managing resource rents in developing countries; promoting contractual norms in the marketplace is growth enhancing.h enhancing

Original language	English
Article number	100929
Journal	The Extractive Industries and Society
Volume	8
Issue number	3
Early online date	11 May 2021
DOIs	https://doi.org/10.1016/j.exis.2021.100929
Publication status	Published - Sept 2021

Bibliographical note

NOTICE: this is the author’s version of a work that was accepted for publication in The Extractive Industries and Society. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in The Extractive Industries and Society, 8:3, (2021) DOI: 10.1016/j.exis.2021.100929

© 2021, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

Developing countries
Economic growth
Economic norms
Oil curse
Oil wealth
System-GMM

ASJC Scopus subject areas

Geography, Planning and Development
Development
Economic Geology
Management, Monitoring, Policy and Law

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.exis.2021.100929

Post-PrintAccepted author manuscript, 1.38 MBLicence: CC BY-NC-ND

Cite this

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abstract = "This paper investigates how economic norms shape the relation between oil wealth and economic growth based on a dynamic model that accounts for endogeneity problems. To achieve that, we apply a system-GMM dynamic approach in 103 developing countries classified by their level of contract intensity, over the period 1970–2010. We find that controlling for contract intensity, is important in rendering the direction of the detrimental effects of oil wealth on economic growth. When economies are characterised by a low degree of contract intensity, oil wealth is not growth-enhancing. And when economies achieve a certain level or threshold of contract intensity, then they may become immune to the economic resource curse. In this connection we make an important contribution, by identifying a threshold level of contract intensity, above which the resource curse vanishes. Overall, our paper demonstrates that the oil related economic curse is not inevitable. The presence of contract intensive economic norms can alter a curse into a blessing, and we identify the point at which the switch takes place. This has important implications for policy design in managing resource rents in developing countries; promoting contractual norms in the marketplace is growth enhancing.h enhancing",

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Revisiting the oil wealth- growth nexus: The role of economic norms in avoiding the oil curse

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

UN SDGs

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