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Oil curse, economic growth and trade openness

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Vespignani, JL ORCID: 0000-0003-0265-4377, Raghavan, M ORCID: 0000-0002-4123-5004 and Majumder, MK 2019 , Oil curse, economic growth and trade openness.

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Abstract

An important economic paradox that frequently arises in the economic literature is that
countries with abundant natural resources are poor in terms of real gross domestic product per
capita. This paradox, known as the ‘resource curse’, is contrary to the conventional intuition
that natural resources help to improve economic growth and prosperity. Using panel data for
95 countries, this study revisits the resource curse paradox in terms of oil resources abundance
for the period 1980–2017. In addition, the study examines the role of trade openness in
influencing the relationship between oil abundance and economic growth. The study finds that
trade openness is a possible avenue to reduce the resource curse. Trade openness allows
countries to obtain competitive prices for their resources in the international market and access
advanced technologies to extract resources more efficiently. Therefore, natural resource–rich
economies can reduce the resource curse by opening themselves to international trade.

Item Type: Report (Discussion Paper)
Authors/Creators:Vespignani, JL and Raghavan, M and Majumder, MK
Keywords: Oil rents, real GDP per capita, trade openness, dynamic panel data model
Publisher: University of Tasmania
Copyright Information:

Copyright 2019 University of Tasmania

Additional Information:

JEL Classification numbers: E23, F13, Q43

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