Oil Discovery, Political Institutions and Economic Diversification

Nouf Alsharif and Sambit Bhattacharya
Authors registered in the RePEc Author Service: Sambit Bhattacharyya

No 2016-19, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: Classical theory predicts that petroleum rich countries would specialise in petroleum products. Yet diversification is touted as a desirable policy objective for petroleum rich nations because it reduces exposure to volatility. Given such theoretical ambiguity, it is important to understand the empirical relationship between petroleum and diversification. In this paper, we test the effect of giant oil discoveries on diversification using a panel dataset covering up to 136 countries and the period 1962 to 2012. After controlling for country and year fixed effects, we find evidence of non-oil export concentration 8 years after a discovery. However, we do not observe any effect on the structure of employment in the non-resource and manufacturing sectors. It appears that democratic political institutions moderate the export concentration effect of petroleum discovery. Countries with weak political institutions experience employment concentration in the non-tradable sector post discovery.

Keywords: Oil Discovery; Political Institutions; Structural Change; Export Diversification (search for similar items in EconPapers)
JEL-codes: D72 O11 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cis, nep-gro and nep-pol
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Oil Discovery, Political Institutions and Economic Diversification (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:csa:wpaper:2016-19

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