Oil curse, economic growth and trade openness

Monoj Kumar Majumder, Mala Raghavan () and Joaquin Vespignani
Authors registered in the RePEc Author Service: Monoj Kumar Majumder and Monoj Kumar Majumder

Energy Economics, 2020, vol. 91, issue C

Abstract: An important economic paradox 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 trade openness is a possible avenue to reduce the resource curse, in our sample, trade openness reduces oil curse by around 25%. 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 increasing exposure to international trade.

Keywords: Oil rents; Real GDP per capita; Trade openness; Dynamic panel data model (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Related works:
Working Paper: Oil curse, economic growth and trade openness (2019)
Working Paper: Oil Curse, Economic Growth and Trade Openness (2019)
Working Paper: Oil Curse, Economic Growth and Trade Openness (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:91:y:2020:i:c:s014098832030236x

DOI: 10.1016/j.eneco.2020.104896

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