Oil Curse

Monoj Kumar Majumderad, Mala Raghavan () and Joaquin Vespignani

MPRA Paper from University Library of Munich, Germany

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 Course; Economic Growth; Trade Openness (search for similar items in EconPapers)
JEL-codes: E0 E00 E4 E42 Q4 (search for similar items in EconPapers)
Date: 2020, Revised 2020
New Economics Papers: this item is included in nep-ene, nep-int and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:101138

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