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Oil and Growth in Transition Countries
Abstract
This paper examines the impact of oil on economic growth in transition economies of the former Soviet Union (FSU) and Central and Eastern Europe (CEE). We use oil production and reserves data in a series of panel estimations to show that oil has had strong and robust positive growth effects between 1990-2006. This is confirmed when we consider the different oil ownership structures. Additionally, we find that privatization levels have had positive growth effects, while privatization speed has had negative effects on growth.
... Those gains provided an increase in GDP per capita in the states during the study period. These results are confirmed by the papers (Alshehry and Belloumi 2015;Brunnschweiler 2009;Gronwald et al. 2009;Idrisov et al. 2015). ...
... However, these enterprises showed a steadily low efficiency of their management, since few of the new owners had the opportunity and desire to invest heavily in updating production technologies of giant enterprises. This result coincides with the papers (Brunnschweiler 2009;Cook and Uchida 2003;Filipovic 2006;Hamm et al. 2012). ...
... Due to the lack of collected data, this conclusion should be confirmed by further investigation with regard to the situation in each of the selected countries. In general, the results are supported by the studies (Brunnschweiler 2009;Filipovic 2006;Hamm et al. 2012;Katsoulakos and Likoyanni 2002) and reflect the difference between transition economies and developed market economies that have a clear tendency of reducing the industrial sector share in favor of the service sector because of transition to a post-industrial economy. ...
Following the United States, China is the second largest trade partner of the European Union (EU). In turn, the EU is China’s biggest partner in general trade. The prospects for the development of mutual trade relations are promising. Citizens of the EU and China constitute a quarter of the entire population of the world. The rapidly developing trade exchange between these two entities is subject of the analysis in this dissertation. The main objective of the dissertation is to assess
the importance of agri-food products in trade turnover between the EU and China and to identify the main determinants of mutual trading. Three main factors determining the dynamic development of mutual turnover in the field of agri-food products were identified: (1) dynamic growth of GDP and demand for food products in China, (2) admission of China to the WTO, (3) Chinese policy of “New opening” in trade cooperation with the EU countries.
... Those gains provided an increase in GDP per capita in the states during the study period. These results are confirmed by the papers (Alshehry and Belloumi 2015;Brunnschweiler 2009;Gronwald et al. 2009;Idrisov et al. 2015). ...
... However, these enterprises showed a steadily low efficiency of their management, since few of the new owners had the opportunity and desire to invest heavily in updating production technologies of giant enterprises. This result coincides with the papers (Brunnschweiler 2009;Cook and Uchida 2003;Filipovic 2006;Hamm et al. 2012). ...
... Due to the lack of collected data, this conclusion should be confirmed by further investigation with regard to the situation in each of the selected countries. In general, the results are supported by the studies (Brunnschweiler 2009;Filipovic 2006;Hamm et al. 2012;Katsoulakos and Likoyanni 2002) and reflect the difference between transition economies and developed market economies that have a clear tendency of reducing the industrial sector share in favor of the service sector because of transition to a post-industrial economy. ...
... Those gains provided an increase in GDP per capita in the states during the study period. These results are confirmed by the papers (Alshehry and Belloumi 2015;Brunnschweiler 2009;Gronwald et al. 2009;Idrisov et al. 2015). ...
... However, these enterprises showed a steadily low efficiency of their management, since few of the new owners had the opportunity and desire to invest heavily in updating production technologies of giant enterprises. This result coincides with the papers (Brunnschweiler 2009;Cook and Uchida 2003;Filipovic 2006;Hamm et al. 2012). ...
... Due to the lack of collected data, this conclusion should be confirmed by further investigation with regard to the situation in each of the selected countries. In general, the results are supported by the studies (Brunnschweiler 2009;Filipovic 2006;Hamm et al. 2012;Katsoulakos and Likoyanni 2002) and reflect the difference between transition economies and developed market economies that have a clear tendency of reducing the industrial sector share in favor of the service sector because of transition to a post-industrial economy. ...
... A far less number of publications are devoted to economic and environmental performance of transition and post-communist economies, in particular, the republics of the former Union of Soviet Socialist Republics (USSR) (for example , Brunnschweiler 2009;Carvalho 2016;Cornillie and Fankhauser 2004;Filipovic 2006;Gronwald et al. 2009;Hamm et al. 2012;Idrisov et al. 2015;Kasman and Duman 2015;Liobikiene et al. 2016;Nepal et al. 2014;Shukurov et al. 2016;Zhang 2013). These studies examine factors that affect economic and environmental development indicators of post-communist and transition states and consider the main determinants of GDP growth and CO 2 emissions as well as following factors are also effective: energy efficiency, energy prices, economic restructuring, technological changes, investment, innovation, privatization, urbanization, and others. ...
... Those gains provided an increase in GDP per capita in the states during the study period. These results are confirmed by the papers (Alshehry and Belloumi 2015;Brunnschweiler 2009;Gronwald et al. 2009;Idrisov et al. 2015). ...
... However, these enterprises showed a steadily low efficiency of their management, since few of the new owners had the opportunity and desire to invest heavily in updating production technologies of giant enterprises. This result coincides with the papers (Brunnschweiler 2009;Cook and Uchida 2003;Filipovic 2006;Hamm et al. 2012). ...
... 4 See, for example, Acemoglu et al. (2001). 5 These various potential transmission channels were investigated by Gylfason (2001), Gylfason and Zoega (2002), Papyrakis andGerlagh (2004), andBrunnschweiler (2009). 6 Strictly speaking, cross-country estimation makes it difficult to determine causality. ...
... First, in addition to looking at the relationship between natural resources and economic growth, we examine the link between natural resources and the countries' institutions, investments in physical and human capital, and such indicators of welfare as life expectancy and infant mortality. 9 In fact, given that our results on growth rates do not contradict Brunnschweiler's (2009), we focus on these additional indicators of economic performance and welfare. Second, we do not limit our sample to the economies in transition but perform estimations based on a large cross-section of countries, using dummy variables (both by themselves and in interaction with natural resource wealth) for the economies in transition. ...
... These results do not support the notion of a significant natural resource curse with respect to most aspects of institutional development either in general or in the economies in transition. This finding is in contrast with the results obtained by Brunnschweiler (2009) for control of corruption (see Table 6 in her paper). The reason for the divergence is that Brunnschweiler controls for actual per capita GDP and, naturally, obtains a result similar to that in our Table A5, Column 1. ...
Using cross-country regressions, we examine the relationship between “point-source” resource abundance and economic growth, quality of institutions, investment in human and physical capital, and social welfare (life expectancy and infant mortality). Contrary to most literature, we find little evidence of natural resource curse outside of the economies in transition. In the economies in transition, there is some evidence that natural resource wealth is associated with higher infant mortality. This negative effect, however, exists only relative to other resource rich countries. Compared to other economies in transition, natural resource abundant transitional economies are not worse off with respect to our indicators.
... Even though, natural resource abundance is often associated with a low economic performance (Sachs and Warner, 1995;Gasimov, 2014;Aliyev and Gasimov, 2018). Researchers, such as Bulte et al. (2005a), Isham et al. (2005), Brunnschweiler andBulte (2008), andHartwell (2016a) argue that institutions are the key drivers of the relationship between natural resources and economic growth via political, economic and social channels. Moreover, the relationship between institutional quality and economic growth may vary depending on the resource richness of a country (Sachs and Warner, 1995). ...
... In contrast, Alexeev and Conrad (2009) reported no detrimental effect of natural resource endowments on the long-term economic growth of Russia, Ukraine, and Belarus. On the other hand, in her paper, Brunnschweiler (2009) demonstrates positive economic effects of natural resources in the post-Soviet and Eastern European countries by emphasizing institutional quality and political system problems. However, the author also claims that oil revenues have a negative impact on corruption rate, human capital formation, and democracy. ...
After regaining independence, most of the post-Soviet countries encountered socioeconomic difficulties during the transition period. These challenges were also accompanied by low institutional quality. Some of the post-Soviet countries, such as Russia, Turkmenistan, Kazakhstan and Azerbaijan, can be categorized as energy-rich, while the remaining countries are non-rich in terms of energy. Thereby, the aim of this study is twofold: first, to analyze the impact of institutional quality on economic growth in the case of non-EU post-Soviet countries, and second, to determine whether there is any difference in the link of institutional quality and economic growth between the energy-rich and non-rich sample countries. Two-Stage Least Squares reveal a U-shaped association between institutional environment and economic growth. Furthermore, the results suggest that this impact is lower in the energy-rich countries compared with their non-rich counterparts. With regards to the control variables, the findings indicate a positive and statistically significant impact of openness on economic growth. Finally, there is a negative association between the remaining control variables, such as inflation, population growth rate and the dependent variable. Gasimov, I., Jabiyev, F., & Asgarzade, G. (2023). Institutional quality and economic growth in the non-EU post-Soviet countries: Does energy abundance matter?.
... When private investors have a more prominent role in the oil sector, oilrich countries witness better fiscal outcomes. This chapter relates to the study by Brunnschweiler (2009), who did an exploratory analysis of the effect of oil ownership on growth using a sample of 27 transition countries of the former Soviet Union, and Central and Eastern Europe during 1990-2006. The author uses the database on ownership structures developed by Luong and Weinthal and finds that all ownership structures lead to higher growth and that state ownership with control contributes most positively to growth. ...
... Given that the spending policy of the state is the main causal channel linking oil abundance to growth, the arguments and findings of Luong and Weinthal have given rise to the following prediction: oil abundance would be most harmful to growth under state ownership and less so under private ownership (see Brunnschweiler, 2009). However, there are two points of consideration here: First, citizens' expectations for distribution of benefits alone cannot determine how oil revenues are managed in a country. ...
... Using oil production per capita as a proxy for oil abundance, Brunnschweiler (2009) not only does not find evidence in support of natural resource curse in oil sector but also she obtains the strong positive relationship between oil resource and economic growth. Contrary to the above researches, Brückner (2010) argues that the share of resource export in GNP underestimates the negative link between natural resource abundance and growth. ...
... In another study, Brunnschweiler and Bulte (2008) also mention that the ratio of primary exports to GDP for a single year is a proxy that measures resource dependence (or resource intensity) rather than abundance and should not be included in the growth model as an exogenous explanatory variable because it suffers from an endogeneity problem. Therefore, the share of total natural capital in total capital is introduced as the measure of resource abundance (Brunnschweiler, 2008(Brunnschweiler, , 2009Brunnschweiler and Bulte, 2008;Stijns, 2005Stijns, , 2006. Additionally, others like Papyrakis and Gerlagh (2004) and Gylfason and Zoega (2006) use the share of resource production in GDP as a proxy. ...
It is expected that possessing the natural resources could faster increases the pace of growth in natural resource endowed countries. However, history has shown that this is not the case for some resource rich countries. In the current study, hence, we assess whether more developed financial markets can channel the revenues from oil into more productive activities and thus offset the negative effects of oil abundance on growth. To this end, we adopt the common correlated effect mean group estimator to account for the high degree of heterogeneity (because of substantial cross-sectional dependence in our data) for a core sample of 63 oil-producing countries from 1980 through 2010. The empirical results show that oil abundance affects the growth rate in output based on the degree of development in financial markets. In other words, better financial development dampens the negative impact of oil abundance on economic growth.
... Chontanawat, Hunt & Pierse (2006),Brunnschweiler (2008), Brunnschweiler (2009), Narayan & Smyth (2008,Apergis & Payne (2010),(Stern, 2011), Acaravci &Ozturk(2012), Bildirici (2013), Yenilmez & Erdem (2018), Aydemir, Atılgan & Türkmen (2020), Barro & Lee (2020), Topçu, Altinoz & Aslan (2020), Gylfason &Zoega (2021), Haseeb vd. (2021), Hayat & Tahir(2021), Ramzan vd. ...
... The results of the study can be summarized in three main points: (i) natural resource dependence had a negative impact in all categories in the long run, (ii) countries with weak institutions are more susceptible to the resource curse as their path to recovery is also negatively affected by resource dependence, and (iii) the results suggest a potential positive impact of natural resources during the recovery process in a robust institutional environment. Brunnschweiler (2009) investigated the impact of oil revenues on the growth of former Soviet Union and Central and Eastern European transitional countries from 1990 to 2006. The study used panel estimations and demonstrated that oil had significant and substantial growth benefits. ...
The nexus between foreign direct investment, natural resource endowment, and their impact on sustained economic growth, is contentious. This study investigates the resource curse hypothesis and the effects of FDI on economic growth in Kazakhstan. The study covers the period from 1990 to 2022 and employs the Autoregressive Distributed Lag (ARDL) model and Toda-Yamamoto causality methods. The Bounds cointegration results reveal the existence of long-term equilibria between per capita GDP and the predictors. The findings reveal a significant impact of oil rents on economic growth, contradicting the resource curse hypothesis and suggesting a resource boon instead. In stark contrast, the impact of FDI on Kazakhstan’s economic growth is found to be insignificant, despite the presence of a causal nexus. Furthermore, economic freedom and export diversification have a positive significant impact on economic growth, while inflation exhibits a negative but significant impact. Although governance has a direct impact on GDP per capita, it is deemed insignificant, as the negative average governance index implies poor governance. Expectedly, the result establishes a causal effect between export diversification, economic freedom, governance, oil rents, and economic growth. This underscores the fundamental role played by the interplay of diversification, economic freedom, governance, and oil rents in fostering sustainable economic growth. In addition, economic freedom stimulates gross fixed capital formation, indicating that it enhances domestic investment. Notably, the findings refute the crowding-out effect of FDI on domestic investment in Kazakhstan. Consequently, to escape the resource curse and the Dutch disease syndrome, the study advocates for enhancing good governance capabilities in Kazakhstan. Thus, we recommend that good governance could reconcile the twin goals of economic diversification and deriving benefits from oil resources, ultimately transforming oil wealth into a boon in Kazakhstan.
... The first examples of studies investigating the relationship between EC and FD coincide in 2009. The first studies to investigate the relationship belongs to Brunnschweiler (2009) and Dan and Lijun (2009). However, the first study to seriously discuss and explain the relationship between EC and FD was conducted by Sadorsky in 2011 and this study pioneered the literature. ...
Energy is an essential factor for countries to accomplish sustainable development and the importance of renewable energy has enhancing day by day. Over the last three decades the relationship between renewable energy consumption (RNW) and economic growth as well as energy consumption (EC) and financial development (FD) has intensely studied. In this paper the relationship between RNW, non-renewable energy consumption (non-RNW) and FD is investigated for top emerging countries of Bloomberg. The financial system deposits to GDP, deposit money bank assets to GDP and private credit to GDP have considered as FD indicators in the paper that investigates the period of 1980-2018. The long-term relationship between the variables was studied with Westerlund (2007) panel cointegration test and the direction of this relationship was examined with Pesaran (2006) CCE-MG panel cointegration estimator. The existence of causality among the variables was analyzed with Dumitrescu and Hurlin (2012) panel causality test. According to the cointegration test results, a positive long-run relationship was found between RNW and FD. Also, there is a bidirectional causality finding between RNW and FD, and there is a one-way causality finding from FD to non-RNW. Özet Enerji, ülkelerin sürdürülebilir kalkınmayı başarması için önemli bir faktördür ve yenilenebilir enerjinin önemi her geçe gün artmaktadır. Son otuz yılda yenilenebilir enerji tüketimi-ekonomik büyüme ve enerji tüketimi-finansal gelişim ilişkileri yoğun bir şekilde araştırılmıştır. Bu çalışmada Bloomberg'in en çok gelişmekte olan ülkeleri için yenilenebilir enerji tüketimi, yenilenemeyen enerji tüketimi ve finansal gelişim arasındaki ilişkiler araştırılmıştır. 1980-2018 dönemini ele alan çalışmada bankalardaki mevduatların GSYİH'ye oranı, finansal sistem mevduatının GSYİH'ye ve özel kredilerin GSYİH'ye oranı finansal gelişim göstergeleri olarak kullanılmıştır. Değişkenler arasındaki uzun vadeli ilişki Westerlund (2007) panel eşbütünleşme testi ile incelenmiş ve bu ilişkinin yönü Pesaran'ın (2006) CCE-MG panel eşbütünleşme tahmincisi ile belirlenmiştir. Dumitrescu ve Hurlin (2012) tarafından geliştirilen panel nedensellik testi vasıtasıyla ile değişkenler arasında nedenselliğin yönü araştırılmıştır. Elde edilen panel eşbütünleşme testi sonuçlarına göre, yenilenebilir enerji tüketimi ve finansal gelişim arasında uzun dönemli pozitif yönlü bir ilişki bulunmuştur. Öte yandan, yenilenebilir enerji tüketimi ile finansal gelişim arasında çift yönlü nedensellik bulgusuna rastlanmış olup, finansal gelişimden yenilenemez enerji tüketimine doğru ise tek yönlü nedensellik bulgusu söz konusudur.
... Brunnschweiler [40] provides an exploratory analysis of the economic effects of oil ownership. The author uses economic growth as an indicator of economic performance and analyzes a sample of 27 transition countries of the former Soviet Union, and Central and Eastern Europe during 1990-2006. ...
This article investigates whether oil ownership affects welfare, and whether the effect is influenced by the quality of institutions prevailing in the country. The analysis is based on a sample of 41 oil-rich developing countries during 1984-2005. Using different measure of welfare and employing panel fixed-effects estimation method, the study finds that oil ownership affects welfare. It also finds that the quality of institutions influences the ownership-welfare nexus. In countries with weak institutions, private ownership of oil leads to higher welfare than state ownership, while in countries with strong institutions, state ownership of oil leads to higher welfare than private ownership. The results are useful for oil-rich countries in adopting appropriate policies to maximize the benefits of oil to the nation and improve the quality of life of the people.
... Lorde et al., (2009) found oil has been the main determinant of economic activity in Trinidad and Tobago. Brunnschweiler (2009) concluded with a positive and highly significant effect of oil on economic development in transition economies of the Former Soviet Union (FSU) and Central and Eastern Europe (CEE) between 1990 and 2006. Using the OLS method, Hassan and Abdullah (2015) investigated the impact of oil revenue and the service GDP of Sudan, found a positive effect of oil revenue on service GDP. ...
Oil revenues and external debt might have stimulated economic growth in the oil exporting countries via investment in capital projects. The paper estimated economic growth on oil revenues and external debt after controlling public investment and population growth over the period 1970-2015. Following the confirmation of the order of integration, our analysis is based on autoregressive distributed lag bound testing to cointegration approach. The key findings are that oil revenues and public investment contributes to Nigeria’s economic growth. However, our findings also indicate that external debt and population growth retards growth. The study suggests that minimizing fiscal deficits and unnecessarily foreign loans by creating tax avenues through the development of the non-oil sectors would reduce the dependency syndrome on a single commodity (oil) in Nigeria.
... They analyze five oil-rich countries of the former Soviet Union 1 during 1990-2005 and find that oil wealth leads to poor taxation and spending outcomes only when there is state ownership in the oil sector; when private investors have a more prominent role in the oil sector, oil-rich countries witness better fiscal outcomes. Brunnschweiler (2009) provides an exploratory analysis of the effect of ownership structures on economic growth using a sample of 27 transition countries of the former Soviet Union, and Central and Eastern Europe during 1990-2006. The author uses the ownership database developed by Luong and Weinthal (2010) and shows that all ownership structures lead to higher growth and that state ownership and control contributes most positively to growth. ...
A large body of literature shows that oil wealth leads to poor quality of institutions. The existing literature, however, neglects the dimension of ownership. This article provides the first empirical investigation of whether ownership of oil matters for institutional quality. Using a novel database on ownership structures, it analyzes a sample of 38 oil-rich developing countries during 1984–2005. The estimation results show that ownership matters and that private ownership of oil leads to a better quality of institutions than state ownership. The results are useful for oil-rich countries in adopting appropriate policies to maximize the benefits of oil to the nation.
... Despite extensive literature on the issue of institutional changes determinants in the post-socialist countries (e.g., de Melo et al., 2001;Pejovich, 2003;Piątek et al., 2013;Schweickert et al., 2011), only few studies focus on the impact of natural resources on this process and their results lead to ambiguous conclusions (Alexeev & Conrad, 2011;Brunnschweiler, 2009;Horvath & Zeylanov, 2014;Kronenberg, 2004). Therefore, there is still a need for further research on the natural resource curse, especially in the post-socialist economies that have experienced quasi-natural experiment of radical institutional changes (Piątek, 2016). ...
The aim of the research was to indicate whether fossil fuels abundance had a negative effect on political and economic changes in the post-socialist countries in the years 1991-2015. The research covered 28 countries of Central-Eastern Europe and the former Soviet Union. Data were collected from the Freedom House (FH) and the European Bank for Reconstruction and Development (EBRD) databases, as well as the BP database. The results of conducted study showed that the abundance of fossil fuels resources did not have a decisive influence on the process of market economy creation and democratisation of the post-socialist countries of Central-Eastern Europe and the former Soviet Union.
... However, oil production and economic growth nexus did notexamined in the literature adequately. Brunnschweiler (2009), Ozkan et al. (2012, Korkmaz and Develi (2012), Alkhathlan (2013), Bildirici and Kayıkçı (2013) * Ph.D. candidate. Email: msgorus@ybu.edu.tr are some of the works which examined this relationship. ...
This paper aims to estimate the effect of oil production on economic growth in Saudi Arabian economy for the period between 1970 and 2013. Moreover, it investigates the causal relationship between oil production and economic growth applying the ARDL Bound test and Bootstrap Granger causality test. Results show that variables are cointegrated and that oil production elasticity of economic growth is estimated to be 1.005 in the long-run. Meanwhile, Bootstrap Granger Causality Test indicates that there is not any causal relationship between oil production and economic growth.
... When private investors have a more prominent role in the oil sector, oil-rich countries witness better fiscal outcomes. This article relates to the work of Brunnschweiler (2009) who did an exploratory analysis of the effect of oil ownership on growth of 27 transition countries of the former Soviet Union, and Central and Eastern Europe during 1990-2006. The author uses the ownership data of Luong and Weinthal and finds that all ownership structures lead to higher growth and that state ownership with control contributes most positively to growth. ...
A large body of literature finds a negative relationship between oil abundance and economic growth. The existing empirical evidence on the oil curse, however, does not account for variations in the ownership of oil. This article investigates whether the effect of oil abundance on growth varies with ownership structures. It also investigates whether pre-existing institutional conditions influence the effect of oil abundance across different ownership structures. Using a novel database on ownership structures and employing a panel fixed effects estimation method, it analyzes a sample of oil-exporting developing countries during the period 1984–2005. The results show that the effect of oil abundance on growth varies with ownership structures and is also influenced by the quality of pre-existing institutions. Under state ownership and control, oil abundance reduces growth when the institutional quality is poor, but increases growth when the institutional quality is good. Under private ownership, on the other hand, oil abundance increases growth when the institutional quality is poor, but reduces growth when the institutional quality is good. The results suggest that ownership matters and countries can avoid the oil curse by choosing an appropriate ownership structure given their pre-existing institutional circumstances. The policy advice in this article is: adopt state ownership and control if the institutions are strong, if the institutions are weak, transfer ownership to foreign oil companies.
In this paper we analyze whether the long-term economic growth of Kazakhstan is subject to macroeconomic constraints. The balance-of-payments-constrained growth (BPCG) models predict that a country’s growth rate can be approximated through the ratio of growth rates of exports to the income elasticity of demand for imports. We apply the BPCG model to Kazakhstan’s quarterly data—a typical emerging economy with a low trade to GDP ratio. To estimate the trade parameters we use Johansen’s cointegration technique. Vector error correction model is employed to analyze the short-run adjustments of income elasticities. The results demonstrate that the average growth rate estimated by the BPCG hypothesis projects around 2% long-run economic growth for Kazakhstan and current economic growth is aggregate demand constrained.
This enquiry addresses production and employment effects, which emanate from the extractive industries of Kazakhstan. To this end, the study employs static input-output models (IOMs) of Kazakhstan for the years 2007, 2010, 2012 and 2017 and dynamic nonlinear autoregressive distributed lag (NARDL) models for the period 1995-2018. IOMs show that extractives in Kazakhstan exhibit relatively strong links to the domestic manufacturing. NARDL estimators reveal a positive relationship between commodity revenues and manufacturing value added in the commodity revenue boom phase and a high level of resilience of Kazakh manufacturing to the downward movements of commodity revenues. Commodity revenues have a statistically significant positive impact on the aggregate employment rate. The study does not detect asymmetries concerning the job creation effects of the manufacturing sector.
This paper focuses on the Southeastern European and Black Sea Countries and examines
the association between natural resources abundance, energy dependency, and a series of growth-related and institutional variables during a thirty-year period (1985 –2015). The
empirical results show a positive impact of natural resource abundance on the majority of the examined variables, which does not support the resource curse hypothesis. Common sector characteristics of the examined economies verify the empirical results.
This study examines the relationship between oil production and economic growth in Angola for the period of 1985-2015. Relying upon the estimation of autoregressive distributed lag model, the study finds that oil production and economic growth are cointegrated. Furthermore, there is positive unidirectional causality from oil production to economic growth in the long run which supports policies about investing in energy infrastructure. However, the absence of reverse causality from economic growth to oil production underscores Angola’s heavy reliance on external demand for its oil to drive economic growth. Thus, policymakers should also consider diversifying the economy to other growing sectors to mitigate the impact of adverse global economic shocks associated with sharp decline in global oil demand.
The resource curse hypothesis postulates that, often, countries rich in natural resources are not able to fully exploit the economic potential of these resources. It has been observed that the more abundantly a country is endowed with resources, the greater is the likelihood of slow (or even negative) GDP growth rate in that country. The curse of natural resources can have different manifestations: economic, institutional and social. The potentially abundant shale gas resources provide an interesting context to study this hypothesis in Poland. Indeed, the situation in Poland resembles that which is often discussed with regard to the resource curse: the sudden discovery of abundant resources, arousing high expectations, with limited national extractive capacities. This article provides a brief overview of the natural resource curse hypothesis based on foreign literature, and then highlights and discusses the most relevant issues which need to be considered in the context of shale gas in Poland. The latter include: quality of institutions, corruption, unequal access to knowledge and uneven bargaining power, a false sense of security, nuisances for local communities and the Dutch disease. In Poland, the potential problems may differ from those observed in less developed countries. The curse in our context may not necessarily translate into low or negative GDP growth rates, but rather into not being able to reap the full potential benefits related to this natural wealth. Based on the above analysis, the article suggests actions to be taken in order to avoid the potential problems (e.g. effective social control over the organization of shale gas extraction and the distribution of income).
Using comparable 2002–2011 data, we examine the effect of oil on growth of Russia’s regions and American states. Although Russia’s oil regions are richer than other regions, they did not grow faster, while US oil producers grew faster than other states. We attribute these differences to different taxation systems in Russia and the United States, with the Russian central government taxing away a larger share of incremental oil rents in the 2000s than did its US counterpart. Moreover, although oil rents attracted labor to oil-producing regions both in Russia and the United States, only in the US oil rents led to higher investment growth.
In the end of the twentieth century, a scholarly consensus emerged around the idea that oil fuels authoritarianism and slow growth. The natural abundance once thought to be a 'blessing,' in other words, was unconditionally, and then later only conditionally, a 'curse' for political and economic development. We re-examine the relationship between oil wealth and political regimes, challenging the conventional wisdom that such natural resource 'rents' lead to authoritarian outcomes. We contend that most efforts to examine the causal linkages between natural resource abundance and political regime have been complicated first by the likelihood that both democracy and oil revenue are endogenous to the industrialization processes itself, particularly in its developmentalist form. As importantly, we expect that regime outcomes must be understood as interdependent, rather than solely a function of the domestic political economy. Any account that does not explicitly model such processes of diffusion will be biased to the extent that characteristics of the domestic political economy are correlated with the observed outcome. Our results, based on an analysis of global data from 1960-2009, show that both regime-resource endogeneity, and several mechanisms of intra-regional diffusion are powerful determinants of political regime outcomes. We conclude that oil wealth is not necessarily a curse, and may even be a 'blessing' with respect to democratic development Paper prepared for presentation at the International Relations Faculty Colloquium, Princeton University, February 27, 2012. We are grateful to Raphael da Cunha for research assistance; and previous versions of the endogeneity argument have been presented at the International Studies Association convention, the University of Pittsburgh, and Georgetown University. All errors remain our own.
This article empirically examines the relationship between growth, poverty, and income inequality in 10 Commonwealth of Independent States (CIS) countries between 1991 and 2006 with a special focus given to the three most successful economies within this group: Russia, Kazakhstan, and Azerbaijan. Largely, by means of panel techniques, results support the pro-poor growth hypothesis as the author confirms that countries' increased aggregate income contributes to poverty reduction. Moreover, some evidence has been found supporting a Kuznets' type inverted-U shape amongst the 10 CIS countries, once a number of variables have been controlled for. The author found that initial conditions (particularly, initial inequality) play an important role in explaining differences in growth patterns. Oil-producing/exporting countries have benefited from that condition in terms of reducing domestic inequalities. Finally, no statistically significant causal relation was found between real gross domestic product and poverty or between real gross domestic product and inequality (in both causality directions).
Collier and Hoeffler reported that countries with a higher percentage of national income from primary commodity exports have been more prone to civil war, an interesting finding that has received much attention from policy makers and the media. The author shows that this result is quite fragile, even using Collier and Hoeffler’s data. Minor changes in the sample framing and the recovery of missing data undermine it. To the extent that there is an association, it is likely because oil is a major component of primary commodity exports and substantial oil production does associate with civil war risk. The author argues that oil predicts civil war risk not because it provides an easy source of rebel start-up finance but probably because oil producers have relatively low state capabilities given their level of per capita income and because oil makes state or regional control a tempting “prize.” An analysis of data on government observance of contracts and investor-perceived expropriation risk is consistent with this hypothesis.
Studies of natural resource wealth and civil war have been hampered by measurement error, endogeneity, lack of robustness, and uncertainty about causal mechanisms. This paper develops new measures and new tests to address these problems. It has four main findings. First, the likelihood of civil war in countries that produce oil, gas, and diamonds rose sharply from the early 1970s to the late 1990s; so did the number of rebel groups that sold contraband to raise money. Second, exogenous measures of oil, gas, and diamond wealth are robustly correlated with the onset of civil war. Still, these correlations are based on a small number of cases, and the substantive effects of resource wealth are sensitive to certain assumptions. Third, petroleum and diamond production lead to civil wars through at least three different mechanisms. Finally, the only resource variable robustly linked to conflict duration is a measure of "contraband," which includes gemstones, timber, and narcotics.
The literature on resource-rich states leaves a key and prior question unexplored: Why and how do states choose to develop their natural resources? The authors address this gap by explaining the divergence in oil and gas development strategies in five energy-rich Soviet successor states. The authors argue that leaders choose development strategies based on the domestic constraints they face when they either discover or gain newfound authority over their resource endowments: (a) the availability of alternative sources of export revenue and (b) the level of political contestation. Where leaders enjoy a high degree of access to alternative export revenue and a low level of contestation, they choose to nationalize their energy sector and to minimize international involvement. Where leaders face a low degree of access to alternative export revenue and a high level of contestation, they privatize their energy sector with direct international involvement. This argument also accurately predicts initial energy development strategies in several other developing countries.
Our goal is to show that contrary to the claims made in several recent papers, the effect of a large endowment of oil and other mineral resources on long-term economic growth of countries has been on balance positive. Moreover, the claims of a negative effect of oil and mineral wealth on the countries' institutions are called into question. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
The curse of natural resources is a well-documented phenomenon for developing countries. Economies that are richly endowed with natural resources tend to grow slowly. Among the transition economies of the former ‘Eastern Bloc’, a similar pattern can be observed. This paper shows that a large part of the variation in growth rates among the transition economies can be attributed to the curse of natural resources. After controlling for numerous other factors, there is still a strong negative correlation between natural resource abundance and economic growth.
Among the transition economies the prime reasons for the curse of natural resources were corruption and a neglect of basic education. In order to overcome the curse of natural resources and move to a sustainable path of development, the resource abundant transition countries should fight corruption and ensure that their resource revenues are invested in human capital or the preservation of natural capital.
We examine existing results on the effect of speed of liberalization on growth during transition. We highlight methodological problems in existing studies, noting the existence of simultaneity and the use of variables that are not valid measures of the phenomena they supposedly represent. We implement solutions, examining the simultaneous relationship between growth and speed of liberalization. Initial conditions are much more important than policy changes in determining growth performance in the first four years of transition. Growth performance during the early years of transition has a strong effect on liberalization speed.
Literature explaining variations in economic performance among transition economies places a high level of importance on the role of policy. Policy differences are measured via a liberalization index used to explain differences in performance. We find that this index may be endogenous to one performance measure, e.g., output decline, and may, therefore, overstate the role of policy. This paper performs an instrumental variables (IV) estimate of the relationship between liberalization and performance that also allows us to generate a relative index of reform progress. The relative index challenges some commonly held preconceptions about which transition economies are rapid reformers and which are slow reformers.J. Comp. Econom.,December 1998, 26(4), pp. 718–734. Macalester College, 1600 Grand Avenue, St. Paul, Minnesota 55105.
We critically evaluate the empirical basis for the so-called resource curse and find that, despite the topic's popularity in economics and political science research, this apparent paradox may be a red herring. The most commonly used measure of “resource abundance” can be more usefully interpreted as a proxy for “resource dependence”—endogenous to underlying structural factors. In multiple estimations that combine resource abundance and dependence, institutional, and constitutional variables, we find that (i) resource abundance, constitutions, and institutions determine resource dependence, (ii) resource dependence does not affect growth, and (iii) resource abundance positively affects growth and institutional quality.
This paper analyses the importance of developing market-enhancing institutions for restoring economic growth in transition economies during 1991–98. The paper's main finding is that the development of an institutional framework has indeed a significant positive impact on growth, but that progress in achieving macroeconomic stabilisation and implementing broad-based economic reforms remain the key determinants of growth in transition economies. Comparative Economic Studies (2003) 45, 2–24. doi:10.1057/palgrave.ces.8100005
Summary Since Sachs and Warner's [Sachs, J. D., & Warner, A. M. (1995a). Natural resource abundance and economic growth. NBER working paper, no. 5398] contribution, there has been a lively debate on the so-called natural resource curse. This paper re-examines the effects of natural resource abundance on economic growth using new measures of resource endowment and considering the role of institutional quality. We find a positive direct empirical relationship between natural resource abundance and economic growth. In both OLS and 2SLS regressions, the positive resource effects are particularly strong for subsoil wealth. Our results also show no evidence of negative indirect effects of natural resources through the institutional channel.
Using a panel of 77 Russian regions from 1990-1998, we investigate the reasons behind largely differing regional growth performance. We consider politico-institutional characteristics, indicators of regional economic reform, and initial conditions (including economic, geographic and structural features). Surprisingly, differences in institutional characteristics or economic reform explain relatively little of the observed difference in regional growth performance. For example, we find no evidence that a region's economic performance has been influenced by the political orientation of its leaders, or the political preferences of the population. In contrast, a region's initial industrial structure, and both its natural and human resource endowments had a large impact on its economic growth performance during the nineties.
A simple application of big-push reasoning suggests that natural resource booms can be important catalysts for development in poorer countries. In this paper we present evidence from seven Latin American countries that natural resource booms are sometimes accompanied by declining per-capita GDP. We present a model with natural resources, increasing returns in the spirit of big push models, and expectations to clarify some of the reasons this may happen.
This paper reviews some reasons why natural resource abundance and extensive agriculture appear to impede economic growth around the world. The paper presents empirical, cross-sectional evidence of various aspects of this relationship in the transition economies in Central and Eastern Europe and Central Asia since 1990. The essence of the argument is that heavy dependence on natural resources and agriculture may result in rent seeking (e.g., corruption) and policy failures (e.g., inflation) and may, moreover, discourage education, external trade, and genuine saving, thereby retarding economic growth. The paper concludes with a brief discussion of the policy implications of the analysis. Copyright 2000 by WWZ and Helbing & Lichtenhahn Verlag AG
This paper surveys the literature on economic growth during the transition from centrally planned to market economy in Central and Eastern European and former Soviet Union countries. It provides a descriptive analysis of regional growth performance vis--vis countries at similar levels of development, including a discussion of the available growth accounting results. The importance of different factors that have been identified in the cross-country literature as being associated with economic growth (namely accumulation and technological change, initial conditions, policies and shocks) is also examined. The paper presents new results on the role of institutions and of government expenditures that fill two main lacunae in the literature . After a brief assessment of the extent to which economic growth has been associated with progress on different measures of well being, the paper concludes with a list of suggested issues to be investigated in the context of specific country studies. 2 ...