Oil Curse, Economic Growth and Trade Openness

48 Pages Posted: 22 Oct 2019 Last revised: 29 Apr 2020

See all articles by Joaquin Vespignani

Joaquin Vespignani

University of Tasmania - School of Economics and Finance

Mala Raghavan

University of Tasmania

Monoj Kumar Majumder

Sher-e-Bangla Agricultural University

Multiple version iconThere are 2 versions of this paper

Date Written: 2019-10-01

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 resource 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.

Keywords: Oil rents, real GDP per capita, trade openness, dynamic panel data model

JEL Classification: E23, F13, Q43

Suggested Citation

Vespignani, Joaquin and Raghavan, Mala and Majumder, Monoj Kumar, Oil Curse, Economic Growth and Trade Openness (2019-10-01). Globalization and Monetary Policy Institute Working Paper No. 370. Available at SSRN: https://ssrn.com/abstract=3473114 or http://dx.doi.org/10.24149/gwp370

Joaquin Vespignani (Contact Author)

University of Tasmania - School of Economics and Finance ( email )

Commerce Building,
Sandy Bay Campus
Sandy Bay, TAS, Tasmania 7005
Australia

Mala Raghavan

University of Tasmania ( email )

French Street
Sandy Bay
Tasmania, 7250
Australia

Monoj Kumar Majumder

Sher-e-Bangla Agricultural University ( email )

Sher-e-Bangla Nagor
Dhaka, 1207
Bangladesh

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
16
Abstract Views
122
PlumX Metrics