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Oil curse, economic growth and trade openness

Majumder, MK, Raghavan, M ORCID: 0000-0002-4123-5004 and Vespignani, J ORCID: 0000-0003-0265-4377 2020 , 'Oil curse, economic growth and trade openness' , Energy Economics, vol. 91 , doi: 10.1016/j.eneco.2020.104896.

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Abstract

An important economic paradox 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 trade openness is a possible avenue to reduce the resource curse, in our sample, trade openness reduces oil curse by around 25%. 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 increasing exposure to international trade.

Item Type: Article
Authors/Creators:Majumder, MK and Raghavan, M and Vespignani, J
Keywords: oil rents, real GDP per capita, trade openness, dynamic panel data model, oil curse
Journal or Publication Title: Energy Economics
Publisher: Elsevier Science Bv
ISSN: 0140-9883
DOI / ID Number: 10.1016/j.eneco.2020.104896
Copyright Information:

© 2020 Published by Elsevier B.V.

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