Oil dependence, quality of political institutions and economic growth: a panel VAR approach

Nikolaos Antonakakis, Juncal Cunado, George Filis, Fernando Perez De Gracia

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    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.
    Original languageEnglish
    Pages (from-to)147-163
    Number of pages17
    JournalResources Policy
    Volume53
    Early online date23 Jun 2017
    DOIs
    Publication statusPublished - 1 Sep 2017

    Keywords

    • resource curse
    • oil dependence
    • economic growth
    • institutions
    • panel VAR

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