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Empirical Evidence on the Resource Curse Hypothesis in Oil Abundant Economy

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  • Satti, Saqlain Latif
  • Farooq, Abdul
  • Shahbaz, Muhammad

Abstract

This present study investigates the relationship between natural resource abundance and economic growth in Venezuelan economy. We have applied the ARDL bounds testing approach to cointegration developed by Pesaran et al. (2001) to examine long run relationship between the variables. The VECM Granger causality is applied to test the direction of causality between the variables. The present study covers the period of 1971-2011. Our empirical evidence indicated that variables are found to be cointegrated. The results confirm that natural resource abundance impedes economic growth. Financial development, capital stock and trade openness enhance economic growth. The feedback hypothesis is also found between natural resource abundance and economic growth.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50150.

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Date of creation: 11 Sep 2013
Date of revision: 20 Sep 2013
Handle: RePEc:pra:mprapa:50150

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Keywords: natural resource abundance; economic growth; cointegration;

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  1. Shahbaz, Muhammad & Tang, Chor Foon & Shahbaz Shabbir, Muhammad, 2011. "Electricity consumption and economic growth nexus in Portugal using cointegration and causality approaches," Energy Policy, Elsevier, Elsevier, vol. 39(6), pages 3529-3536, June.
  2. Muhammad Shahbaz & S M Aamir Shamim & Naveed Aamir, 2010. "Macroeconomic Environment and Financial Sector’s Performance: Econometric Evidence from Three Traditional Approaches," The IUP Journal of Financial Economics, IUP Publications, IUP Publications, vol. 0(1 & 2), pages 103-123, March & J.
  3. Shahbaz, Muhammad, 2012. "Does trade openness affect long run growth? Cointegration, causality and forecast error variance decomposition tests for Pakistan," Economic Modelling, Elsevier, Elsevier, vol. 29(6), pages 2325-2339.
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