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Natural resources volatility and economic growth: evidence from the resource-rich region

Arshad Hayat and Muhammad Tahir

MPRA Paper from University Library of Munich, Germany

Abstract: This research paper investigates the impact of natural resources’ volatility on economic growth. The paper focused on three resources rich economies namely; UAE, Saudi Arabia, and Oman. Using data from 1970 to 2016 and employing the autoregressive distributed lag (ARDL) cointegration approach developed by Pesaran, Shin, and Smith (2001), we found that both natural resources and their volatility matters from the growth perspective. The study found strong evidence in favor of a positive and statistically significant relationship between the natural resource and economic growth for the economy of UAE and Saudi Arabia. Similarly, for the economy of Oman, a positive but insignificant relationship is observed between natural resources and economic growth. However, we found that the volatility of natural resources has a statistically significant negative impact on the economic growth of all three economies. This study contradicts the traditional concept of resources curse and provides evidence of resources curse in the form of a negative impact of volatility on economic growth.

Keywords: Natural Resources; Volatility; Economic Growth; ARDL Modeling; GCC (search for similar items in EconPapers)
JEL-codes: O4 Q33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara, nep-ene, nep-env, nep-gro and nep-war
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:92293

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