Growth, institutions and oil dependence: a buffered threshold panel approach

Saïd Souam (), Yacine Belarbi, Faycal Hamdi and Abderaouf Khalfi

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Abstract: We examine the combined effects of oil dependence and the quality of institutions on economic growth. To do so, we introduce a new buffered thresholdpanel data model and apply it to 19 oil rent-dependent countries over the period 1996-2017. We show that the relationship between growth and oil dependence is not linear. More precisely, three categories of oil-dependentcountries are identified. Only countries with high-quality institutions are very stable. All the other countries have experienced a transition into a buffer zone and are potentially in a transition between two different regimes.When considering oil dependence as a threshold variable, it appears that the quality of institutions has a positive and significant effect on growth when dependence is either low or high. More interestingly, for countries with intermediate levels of oil-dependence, the quality of the institutions negatively impacts growth. Some of these countries have experienced something of an oil-dependence trap.

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Date: 2021
Note: View the original document on HAL open archive server: https://hal.science/hal-03148732
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Citations: View citations in EconPapers (10)

Published in Economic Modelling, 2021, 99

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Journal Article: Growth, institutions and oil dependence: A buffered threshold panel approach (2021)
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