Abstract
The fact that the increase in natural resource revenues is not adequately transferred to human capital investments is one of the main reasons for explaining the weak economic growth performance. The findings of numerous studies investigating the relationship between healthcare expenditures and natural resource abundance in natural resource-rich countries confirm this assertion. These findings can be considered as a source of information in the process of determining the policies regarding human capital investments to be implemented in natural resource-rich countries. The aim of this study is to investigate the relationship between the abundance of natural resources and health expenditures by using data from 2000 to 2016 for GCC (Gulf Cooperation Council) member countries consisting of United Arab Emirates, Bahrain, Qatar, Kuwait, Saudi Arabia and Oman. The empirical results indicated that there is no causal relationship between the variables of GCC countries except Bahrain and UAE. This result shows that the resource curse hypothesis is partially valid. Therefore, GCC countries aiming to increase their economic growth performances by implementing a diversification strategy in production should allocate more sources to health expenditures in order to increase their labor efficiency.
Highlights
One of the most important determinations of the researchers studying in the field of growth economics regarding the natural resource-rich countries is that the income obtained from natural resources and the large-scale oil and natural gas resources do not always have positive results in economic growth performance
We focus on Gulf Cooperation Council (GCC) countries and analyzed the presence of the relationship between oil rents and health expenditure by means of panel causality test suggested by Kónya (2006)
Empirical results showed the lack of causality relationship between oil rents and health expenditures for all GCC countries except for Bahrain
Summary
One of the most important determinations of the researchers studying in the field of growth economics regarding the natural resource-rich countries is that the income obtained from natural resources and the large-scale oil and natural gas resources do not always have positive results in economic growth performance. In many countries having rich oil reserves, autocratic governments are in charge; government institutions do not work effectively; and problems like civil conflicts trigger political and social chaos. In natural resource-rich countries driven by global capital, the natural resource curse hypothesis is valid. According to this hypothesis, natural resource abundance affects economic growth in negatively Studies of Auty (1994) and Sachs and Warner (1995 and 19971) are the pioneer studies that inspired similar researches
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