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The connection between oil and economic growth revisited

Author

Listed:
  • Nuno Torres

    (Faculdade de Economia, Universidade do Porto, Portugal)

  • Óscar Afonso

    (CEF.UP, OBEGEF and Faculdade de Economia, Universidade do Porto, Portugal)

  • Isabel Soares

    (CEF.UP, Faculdade de Economia, Universidade do Porto)

Abstract

This study shows that the cross-section “curse” result found with oil abundance indicators for producing countries disappears in a panel estimation considering the most important growth factors. This happens even excluding institutional quality, which is hindered by oil and ores abundance in several cross-section studies, causing the resource curse. In our estimations, neither of the oil indicators shows a significant impact on growth, but when we consider rig productivity there is a positive effect by capital efficiency in: (i) countries with medium and low income per head from East Asia & Pacific and Latin America & the Caribbean, all technological followers; (ii) countries with high income inequality. These results can reflect the broader scope for factor efficiency increases in less developed countries arising from the oil industry, which is described by a highly globalised know-how.

Suggested Citation

  • Nuno Torres & Óscar Afonso & Isabel Soares, 2010. "The connection between oil and economic growth revisited," FEP Working Papers 377, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:377
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    More about this item

    Keywords

    Energy; Economic growth; Institutions; Natural resource curse; Panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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