Oil Curse, Economic Growth and Trade Openness

49 Pages Posted: 23 Oct 2019

See all articles by Monoj Kumar Majumder

Monoj Kumar Majumder

Sher-e-Bangla Agricultural University

Mala Raghavan

University of Tasmania

Joaquin Vespignani

University of Tasmania - School of Economics and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: October 21, 2019

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.

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

JEL Classification: E23, F13, Q43

Suggested Citation

Majumder, Monoj Kumar and Raghavan, Mala and Vespignani, Joaquin, Oil Curse, Economic Growth and Trade Openness (October 21, 2019). CAMA Working Paper No. 78/2019, Available at SSRN: https://ssrn.com/abstract=3473524 or http://dx.doi.org/10.2139/ssrn.3473524

Monoj Kumar Majumder

Sher-e-Bangla Agricultural University ( email )

Sher-e-Bangla Nagor
Dhaka, 1207
Bangladesh

Mala Raghavan

University of Tasmania ( email )

French Street
Sandy Bay
Tasmania, 7250
Australia

Joaquin Vespignani (Contact Author)

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

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

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