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Natural resources volatility and economic growth: evidence from the resource-rich region

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  • Hayat, Arshad
  • Tahir, Muhammad

Abstract

This research paper investigates the impact of natural resources’ volatility on economic growth. The paper focused on three resources rich economies namely; UAE, Saudi Arabia, and Oman. Using data from 1970 to 2016 and employing the autoregressive distributed lag (ARDL) cointegration approach developed by Pesaran, Shin, and Smith (2001), we found that both natural resources and their volatility matters from the growth perspective. The study found strong evidence in favor of a positive and statistically significant relationship between the natural resource and economic growth for the economy of UAE and Saudi Arabia. Similarly, for the economy of Oman, a positive but insignificant relationship is observed between natural resources and economic growth. However, we found that the volatility of natural resources has a statistically significant negative impact on the economic growth of all three economies. This study contradicts the traditional concept of resources curse and provides evidence of resources curse in the form of a negative impact of volatility on economic growth.

Suggested Citation

  • Hayat, Arshad & Tahir, Muhammad, 2019. "Natural resources volatility and economic growth: evidence from the resource-rich region," MPRA Paper 92293, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:92293
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    More about this item

    Keywords

    Natural Resources; Volatility; Economic Growth; ARDL Modeling; GCC;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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