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Growth, institutions and oil dependence: a buffered threshold panel approach

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  • Saïd Souam

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Yacine Belarbi
  • Faycal Hamdi
  • Abderaouf Khalfi

Abstract

We examine the combined effects of oil dependence and the quality of institutions on economic growth. To do so, we introduce a new buffered thresholdpanel data model and apply it to 19 oil rent-dependent countries over the period 1996-2017. We show that the relationship between growth and oil dependence is not linear. More precisely, three categories of oil-dependentcountries are identified. Only countries with high-quality institutions are very stable. All the other countries have experienced a transition into a buffer zone and are potentially in a transition between two different regimes.When considering oil dependence as a threshold variable, it appears that the quality of institutions has a positive and significant effect on growth when dependence is either low or high. More interestingly, for countries with intermediate levels of oil-dependence, the quality of the institutions negatively impacts growth. Some of these countries have experienced something of an oil-dependence trap.

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  • Saïd Souam & Yacine Belarbi & Faycal Hamdi & Abderaouf Khalfi, 2021. "Growth, institutions and oil dependence: a buffered threshold panel approach," Post-Print hal-03148732, HAL.
    • Handle: RePEc:hal:journl:hal-03148732
    Note: View the original document on HAL open archive server: https://hal.science/hal-03148732
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    Cited by:

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    3. Tadadjeu, Sosson & Njangang, Henri & Woldemichael, Andinet, 2023. "Are resource-rich countries less responsive to global warming? Oil wealth and climate change policy," Energy Policy, Elsevier, vol. 182(C).
    4. Kamguia, Brice & Keneck-Massil, Joseph & Nvuh-Njoya, Youssouf & Tadadjeu, Sosson, 2022. "Natural resources and innovation: Is the R&D sector cursed too?," Resources Policy, Elsevier, vol. 77(C).

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