The role of corruption in the oil price–growth relationship: Insights from oil-rich economies

Joseph David

Economic Change and Restructuring, 2024, vol. 57, issue 6, No 79, 32 pages

Abstract: Abstract This study examines whether the effect of oil prices on economic growth is influenced by the level of corruption. I focus on 30 oil-rich economies and employ dynamic heterogeneous panel estimation techniques to address the issue of cross-sectional dependence. Evidence from the study reveals that the impact of oil prices on growth varies with corruption levels. Specifically, the marginal effect of oil prices on growth is positive at low levels of corruption but hampers immediate and long-term growth at high levels of corruption. Essentially, the results indicate that a simultaneous increase in oil prices and corruption impairs growth, whereas increase in oil prices coupled with a reduction in corruption benefits the economy more. Using a disaggregated sample of countries based on their corruption levels, the results suggest that the adverse effect of simultaneous increases in oil prices and corruption is more pronounced in oil-rich countries with higher levels of corruption compared to those with lower levels. The study implies that the level of corruption is a crucial factor in how changes in oil prices impact long-term growth in oil-rich economies. Therefore, for sustainable long-term economic growth, an increase in oil prices must be accompanied by a significant reduction in corruption.

Keywords: Economic growth; Oil price; Corruption; Oil-rich economies; CS-ARDL (search for similar items in EconPapers)
JEL-codes: C23 O13 O4 O43 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10644-024-09808-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:ecopln:v:57:y:2024:i:6:d:10.1007_s10644-024-09808-5

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/10644/PS2

DOI: 10.1007/s10644-024-09808-5

Access Statistics for this article

Economic Change and Restructuring is currently edited by George Hondroyiannis

More articles in Economic Change and Restructuring from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().