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The effect of oil rents on economic growth: Does digital adoption matter?

Author

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  • Pedram Sharafi

    (Philipps-Universität Marburg, Center for Near and Middle Eastern Studies (CNMS), School of Business and Economics)

  • Mohammad Reza Farzanegan

    (Philipps-Universität Marburg, Center for Near and Middle Eastern Studies (CNMS), School of Business and Economics; CESifo; Economic Research Forum (ERF))

Abstract

This study investigates the relationship between oil rents and economic growth, identifying digital adoption as a critical moderating factor. Utilizing a cross-sectional sample of 101 countries, we analyze the impact of oil rents (2014–2016) on subsequent GDP per capita growth (2016–2023). Our regression analysis provides empirical evidence of a "digitalization-resource nexus": while a significant "oil curse" persists in countries with low digital adoption, this negative association attenuates as digital integration increases. Notably, our findings suggest a turning point (DAI ≈ 0.72) beyond which oil wealth may transition from a growth constraint to a catalyst. These results remain robust after controlling for institutional quality, human capital, and trade openness. The study concludes that investments in digital infrastructure and skills are not merely technological upgrades but essential structural reforms for resource-dependent economies seeking to bypass the resource curse.

Suggested Citation

  • Pedram Sharafi & Mohammad Reza Farzanegan, 2026. "The effect of oil rents on economic growth: Does digital adoption matter?," MAGKS Papers on Economics 202608, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:202608
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    File URL: https://cms.uni-marburg.de/en/fb02/research-groups/economics/macroeconomics/research/magks-joint-discussion-papers-in-economics/papers/2026-papers/08-2026.pdf
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