Abstract
This study makes a substantial contribution to the resources curse argument debates by answering the question of which scenario is bad for the economy “oil abundance” or “oil dependence” by supposing the nonlinearity in this issue. To answer this puzzling question, we use the panel smooth transition regression model (PSTR) for a sample of 33 economies categorized into two sub-panels the oil-abundant economies and the oil-dependent ones for the spanning time from 1990 to 2016. By confirming the nonlinearity in the oil curse argument, our empirical highlights pointed out that the oil curse thesis is very well verified. We revealed that the impact of oil abundance on income factor is more explicit in the oil-abundant economies than in the oil-dependent ones. The estimation of the threshold variable implies that the oil-growth nexus is smoothly switched from one regime to another regime but approximately rapid for the two scenarios. Due to the significant repercussions of the oil on the economic sphere, with the increase of the pace of the climate change symptoms and the depletion of the resources, these economies should seriously take into consideration the resource depletion and the climate emergency issues to preserve the planet’s reserves for future generations towards sustainable and viable future.
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Notes
Saudi Arabia, Russia, Iran, China, Mexico, United Arab Emirates, Venezuela, Norway, Kuwait, Nigeria, Brazil, Algeria, Mexico, Libya, Iraq, Angola, Kazakhstan, Qatar, USA, Japan, Germany, India, Canada, South Korea, France, Great Britain, Italy, Spain, Netherlands, Singapore, Turkey, Thailand, and Belgium
These extreme values are associated with regression coefficients \( {\beta}_0^{\hbox{'}} \) and (\( {\beta}_0^{\hbox{'}}+{\beta}_1^{\hbox{'}} \)).
The impact of the oil abundance on growth is detected by \( {\beta}_0^{\hbox{'}} \) for those economies ifqit ≤ cj and by \( {\beta}_0^{\hbox{'}}+{\beta}_1^{\hbox{'}} \) for those countries where qit > cj.
The selection of the variables, countries, and the starting period was constrained by the resources curse theory and the availability of data.
The oil abundance scenario: (Producer countries + exporting countries):
Producer countries: Saudi Arabia, Russia, Iran, China, Mexico, Canada, United Arab Emirates, Venezuela, Norway, Kuwait, Nigeria, Brazil, Algeria, USA, and Iraq
Exporting countries: Saudi Arabia, Russia, United Arab Emirates, Norway, Iran, Kuwait, Venezuela, Nigeria, Algeria, Mexico, Libya, Iraq, Angola, Kazakhstan, and Qatar
The oil dependence scenario: (Consumer countries + importing countries)
Consumer countries: USA, China, Japan, Russia, Germany, India, Canada, Brazil, South Korea, Mexico, France, Great Britain, and Italy
Importing countries: USA, Japan, China, Germany, South Korea, France, India, Italy, Spain, Netherlands, Singapore, Turkey, Thailand, and Belgium
The oil rent (oil rent expressed as a share of GDP) is multiplied by GDP and divided by the population to determine the aggregate per capita (e.g., Paul [40]).
Following the contribution of [54,55,56,57,58]) and Tiba [50,51,52,53], we use a modified version of the HDI which the does not include the income factor to overcome the multicollinearity issue in the regression analysis. Then the HF formula takes the following form::
HF = \( \frac{1}{2} \)( Gross enrolment+ Life expectancy).
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Highlights
• We attempt to answer the question of which scenario is bad: The “resources curse” or the “resources dependence.”
• We use the PSTR model for 33 countries for the period 1990–2016.
• We pointed out that the oil curse thesis is verified.
• The impact of oil abundance on income factor is more explicit in the oil-abundant economies than in the oil-dependent ones.
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Tiba, S. The Oil Abundance and Oil Dependence Scenarios: the Bad and the Ugly?. Environ Model Assess 26, 283–294 (2021). https://doi.org/10.1007/s10666-020-09737-3
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DOI: https://doi.org/10.1007/s10666-020-09737-3