Oil, Growth, and Health: What Does the Cross-Country Evidence Really Show?
Scandinavian Journal of Economics, Forthcoming
53 Pages Posted: 16 May 2012
Date Written: April 2012
We show that previous results from the resource curse literature are primarily driven by collapsing in oil prices since the mid-1980s. Exploiting cross-country variations in the size of initial oil endowments and the timing of oil discoveries, we find that there is a stable positive relationship between oil abundance and long-run economic growth. Using dynamic panel data methods, we also find no evidence that higher oil rents hinder growth. Focusing on material gain, however, understates the welfare gain from oil, because oil-rich countries benefit more in infant-mortality reduction and longevity gain. Interestingly, such oil-led health improvements are more pronounced in nondemocratic countries, where initial heath conditions were poor and oil wealth is concentrated among the ruling elites.
Keywords: resource curse, oil discoveries, oil-led health improvements
JEL Classification: O11, O13, O47, Q32
Suggested Citation: Suggested Citation