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Oil Abundance and Economic Growth--A Panel Data Analysis

Abstract:
Using panel estimation, this paper shows that higher oil abundance does not hinder crude producers' growth. This sample controls for specificities of oil economies, but the usual cross-section `curse' result is found—it disappears allowing for unobserved effects. The chosen model controls for a potential (but unconfirmed) oil curse working through institutions, and for other growth factors such as education, which is considered by deriving real wage growth as the dependent variable. We measure the oil growth-effects through labor and capital efficiency, and as a factor of production. They are all insignificant for oil production, but rig productivity benefits growth through capital efficiency. However, oil concentration only fosters growth (by reducing the capital necessary to oil exploration) significantly if there is fiscal responsibility, and in developing countries, where institutions are weaker and there is a broader scope for factor-efficiency and technological improvements arising from the oil sector. Keywords: Economic growth, Institutions, Oil curse, Panel data

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Energy Specializations: Petroleum – Exploration and Production; Petroleum – Policy and Regulation; Energy Modeling – Energy Data, Modeling, and Policy Analysis; Energy and the Economy – Energy as a Productive Input; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance; Energy and the Economy – Energy Shocks and Business Cycles

JEL Codes:
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
O13 - Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Q34 - Natural Resources and Domestic and International Conflicts
F44 - International Business Cycles

Keywords: Economic growth, Institutions, Oil curse, Panel data

DOI: 10.5547/01956574.33.2.6

References: View References


Published in Volume 33, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.