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Oil curse, economic growth and trade openness
journal contributionposted on 2023-05-20, 17:58 authored by Majumder, MK, Mala RaghavanMala Raghavan, Joaquin VespignaniJoaquin Vespignani
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.
Publication titleEnergy Economics
PublisherElsevier Science Bv
Place of publicationPo Box 211, Amsterdam, Netherlands, 1000 Ae
Rights statement© 2020 Published by Elsevier B.V.