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 |
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Article number | 100929 |
Journal | The Extractive Industries and Society |
Volume | 8 |
Issue number | 3 |
Early online date | 11 May 2021 |
DOIs | |
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