Abstract
The principle aim of this investigation is the study of fluctuations of oil prices impacts on economic growth of oil-dependent countries with respect to institutional quality. For this purpose we use panel cointegration methodology and error-correction model for 32 oil abundant countries covering the period 1975-2010. The result implies that fluctuations of oil prices impact on economic growth of countries depend on institutional quality index so that the impact of fluctuation is avoided by countries with sufficiently good institutions. More ever, the long-run ratio of investment to products effect is negative and small that shows the quality of investment projects is more importance than the quantity of them in the economic growth of these countries. The effect of trade openness on economic growth in the long-run is positive, statistically significant, and economically sizable.
Highlights
Iran’s industry is a single-product’s industry that has intensive dependence to oil income oil price fluctuation which can make an irrecoverable change in its industry
The principle aim of this investigation is the study of fluctuations of oil prices impacts on economic growth of oil-dependent countries with respect to institutional quality
The result implies that fluctuations of oil prices impact on economic growth of countries depend on institutional quality index so that the impact of fluctuation is avoided by countries with sufficiently good institutions
Summary
Iran’s industry is a single-product’s industry that has intensive dependence to oil income oil price fluctuation which can make an irrecoverable change in its industry. Common economy expresses that increase in resource revenues of a country make upper long-run growth. ‚in spite of that claim‚some considerable evidence show that natural resources are growth factor‚ and cause the decrease of that so this issue as a paradox is in contrary with theories of classical economists ,who believed that resources make opportunity for growth and outspread by accumulation of capital‚and caused make the concept of “resource curse” [1]. ‚ is the essence of natural resource revenues may cause resource curse phenomenon in countries? We can see some countries in the world, though having so many natural resources, but were not facing with these problems. In this study‚the effect of fluctuation of oil prices on economic growth of 32 oil dependence countries was studied with considering the. Quality of institutions in these countries by using Panel Cointegration method
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