The oil production-mineral extraction-economic development nexus: A critical reappraisal

Abstract

Using a Vector Autoregression (VAR) model, this study examines the relationship between crude oil and mineral extraction, and economic development in resource-dependent countries during the period 1995–2015. The results indicate that the performance of crude oil has a positive and significant short-term impact on economic development indicators, gross domestic product (GDP) growth rates, and employment. Additionally, in countries dependent on mineral resources, increases in crude oil prices increases employment rates by 0.8 %. This study also identified a significant long-term link between mineral resource extraction and economic growth, demonstrating that in nations dependent on mineral resources, an increase in crude oil performance is statistically significantly correlated with a 1.5 % increase in GDP growth. The results help clarify the dynamics at play and offer useful information for stakeholders and policymakers as they develop plans for sustainable economic growth and manage the problems brought on by resource dependency.