Revisiting the Resource Curse in the MENA region

Belaid Fateh, Leila Dagher () and George Filis

MPRA Paper from University Library of Munich, Germany

Abstract: This paper aims to investigate whether oil revenues in the MENA region lead to economic growth or whether the resource curse is evident. To do so, we employ a panel Vector Auto-Regressive (PVAR) model comprising not only the economic growth and oil revenues but also the government expenditure. The latter variable is considered to examine whether the oil revenue leads to economic growth via the fiscal policy channel. We further assess whether heterogeneous findings exist depending on the quality of the political institutions of the MENA countries. Our findings suggest that irrespectively of whether a MENA country is democratic or not, the resource-blessing (rather than the resource curse) is evident. More importantly, though, we show that the resource curse is revealed when we consider the status of the chief of state, i.e., whether it is a military officer or not. In particular, we show that countries with military executives suffer from the resource curse, since the oil rents do not lead to economic growth. A number of alternative measures for the quality of political institutions, sample size, and estimation procedures render our findings robust.

Keywords: MENA region; oil revenues; economic growth; political institutions; Panel VAR (search for similar items in EconPapers)
JEL-codes: C33 O47 Q32 (search for similar items in EconPapers)
Date: 2020
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Related works:
Journal Article: Revisiting the resource curse in the MENA region (2021)
Working Paper: Revisiting the resource curse in the MENA region (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:116080

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