Oil dependence, quality of political institutions and economic growth: A panel VAR approach. (September 2017)

• Record Type: Journal Article
• Authors: Antonakakis, Nikolaos; Cunado, Juncal; Filis, George; Gracia, Fernando Perez de
• Is Part Of: Resources policy. Volume 53(2017)
• Page Start: 147
• Page End: 163
• Publication Date: 2017-09
• Subjects: C33 -- O47 -- Q32 -- Q33; Resource curse -- Oil dependence -- Economic growth -- Institutions -- Panel VAR; Mines and mineral resources -- Periodicals; Ressources minérales -- Périodiques; Ressources naturelles -- Gestion -- Périodiques; Environnement -- Politique gouvernementale -- Périodiques; 333.8
• DOI: 10.1016/j.resourpol.2017.06.005
• Languages: English
• ISSNs: 0301-4207

Abstract

Abstract: This paper examines the resource curse hypothesis both within and between countries of different democratic footprint, based on a dynamic model that properly accounts for endogeneity issues. To achieve that, we apply a panel Vector Auto-Regressive (PVAR) approach along with panel impulse response functions to data on oil dependence variables, economic growth and several political institutional variables in 76 countries classified by different income groupings and level of development, over the period 1980–2012. Our results suggest that controlling for the quality of political institutions, and in particular the constraints to the executives, is important in rendering the resource curse hypothesis significant. Doing so, the resource curse hypothesis is documented mainly for developing economies and medium-high income countries. Specifically, when economies from the aforementioned groups are characterised by weak quality of political institutions, then oil dependence is not growth-enhancing. Abstract : Highlights: We examine the resource curse hypothesis (RCH) in countries of different democratic footprint. We employ a panel Vector Auto-Regressive approach along with panel impulse response functions. Controlling for the quality of political institutions is important in rendering the RCH significant. RCH is evident mainly for developing economies and medium-high income countries. Specifically, the RCH is evident in the aforementioned economies with weak political institutions.