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Oil Depletion and Quality of Democracy in Selected Middle-East Countries

Author

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  • Lotfali Agheli

    (Economic Research Institute, Tarbiat Modares University, Tehran, Iran)

Abstract

Oil-abundant countries, Iran, Iraq and the Gulf Cooperation Council (GCC) countries try to improve democratic institutions and to manage their chronically big governments, while experiencing decreased world oil prices. These countries pursue open door policies. Most of the foreign revenues of the region stem from oil and gas exports. Thus, how to manage the production and exports of fossil resources is of great importance. This study aims to analyse the effects of quality of democracy, government size, and the degree of openness in explaining depletion of reserves between 1985 and 2015. After testing for panel unit root and co-integration, a panel data model was estimated considering random effects. The results indicate that democratisation and political stability causes higher depletion of oil. In addition, government size affects depletion in a non-linear form, so that oil production is maximised, when government expenditure accounts for nearly 14% of GDP, on average. Furthermore, trade openness positively impacts on the oil depletion. In this case study, higher oil depletion follows strengthening democratic foundations, resizing the public sector, expanding politico-economic ties with trade partners, and applying the modern technology in the upstream oil industries.

Suggested Citation

  • Lotfali Agheli, 2018. "Oil Depletion and Quality of Democracy in Selected Middle-East Countries," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 68(1), pages 101-114, March.
    • Handle: RePEc:aka:aoecon:v:68:y:2018:i:1:p:101-114
    Note: I am very grateful to Tarbiat Modares University for supporting this research by providing access to web, scientific journals and databases.
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    Cited by:

    1. Ali Nikzadian & Lotfali Agheli & Abbas Assari Arani & Hossein Sadeghi, 2019. "The Effects of Resource Rent, Human Capital and Government Effectiveness on Government Health Expenditure in Organization of the Petroleum Exporting Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 9(2), pages 381-389.

    More about this item

    Keywords

    democracy; oil depletion; government size; openness;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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