Oil-poor Countries Research Articles

Drivers Analysis of Second Oil Crisis Focusing on the Economic Impact of Developing Countries in Asia

As a strategic commodity, oil is essential to the industrial economy and occupies an important position in international competition and national economic development. Price changes in oil affect every aspect of the economic sphere of each country. The three oil crises in history have become major factors in the world oil market prices. Compared with the other two oil crises, the second oil crisis in 1970 was due to the interruption of Iranian oil exports. The market set psychological expectations for the unsteady oil supply, which led to a surge in oil prices. The study of the second oil crisis is of great significance to Asian countries because Asia, as a region of rapid economic development, has an outstanding internal conflict between oil supply and demand, and the causes of the second oil crisis and its impact on the development of Asian countries are also a major concern for countries around the world. This paper examines the characteristics, causes, and manifestations of the second oil crisis from the perspective of industrial policy through case comparison and other methods. Then, this paper finds that the motivations of the second oil crisis are mainly the decline in oil production capacity caused by the Islamic Revolution and countries' oil reserve plans, which exacerbated the oil crisis. The economic impact of the second oil crisis on developing countries in Asia is mainly reflected in the asymmetry of supply and demand, squeezing domestic economic construction funds, and causing a national debt crisis in oil-poor countries in developing countries.

Food security under water scarcity: a comparative analysis of Egypt and Jordan

Although there seems enough water available for our global food needs, there are large areas with growing water scarcity. Food security in these water scarce areas cannot be met through self-sufficiency. The only option is to become more dependent on food imports which is increasingly risky due to volatility in production and food prices. Before 2008, declining food prices and increasing global cereal production favoured the food import strategy. The 2008 world food crisis represented a shock to this strategy and renewed attention was paid to the self-sufficiency strategy. The aim of this paper is to compare the food security strategies of Egypt and Jordan, two water-stressed, increasingly populated, oil-poor countries, pre and post 2008, by means of a food-water analytical framework using FAOSTAT data. Findings show that Egypt and Jordan have many similarities in their food security situation as both are highly dependent on food imports (Egypt 50%, Jordan 95%), and both have a reduced capacity to absorb future price increases. As food imports are inevitable under the water scarce context of Egypt and Jordan, it is important to focus on how to cope with volatilities. Our analysis shows that Jordan has better absorbed the costs of rising food imports than Egypt and that Egypt is trapped by its high domestic cereal production. Having revealed the limited options available to water-scarce countries for food security, we discuss the potential of grain reserves to cope with future price hikes and production shocks.

Pollutant emissions, energy use and real output in Sub-Saharan Africa (SSA) countries

Industrialisation is pivotal to growth sustainability and this requires intense energy use that may invariably trigger pollutant emissions thereby necessitating some evidence-based policy concerns. This study therefore examines the dynamic connection among pollutant emission, energy use and real output per capita in SSA. Owing to cross-sectional dependence, the Prais-Winsten model with panel-corrected standard error (PCSE) alongside the panel spatial correlation consistent (PSCC) approach is applied and key findings are established. First, the EKC hypothesis holds and this is striking for both oil-rich and oil-poor SSA countries. Second, energy use induces pollutant emissions in oil-rich SSA countries but not in oil-poor SSA countries. Third, pollutant emissions and energy use are real output per capita-enhancing in SSA generally and in oil-poor countries. Thus, policy measures to safeguard efficient optimisation of energy use in ensuring a balance as well as developing SSA’s rich renewable energy sources is imperative for long-run growth.

Energy consumption, CO2 emissions and economic growth in MENA countries

This study investigates the relationship between economic growth, final consumption, investment, energy use and CO2  emissions in two groups of Middle East and North Africa (MENA) countries: Oil Poor Countries (OPC) and Oil Rich Countries (ORC). It is assumed and verified that the structural relationship between GDP growth, energy use and CO2  emissions is different in these two groups of countries. FGLS panel estimations were carried out over the period 1974–2014. In ORC, no significant relationships are observed between energy use and GDP, whereas CO2 emissions and GDP are positively linked. In OPC, there are opposite connections: a positive link between GDP and energy use, whereas the impact of CO2  emissions on GDP tends to be negative. In both groups of countries, a positive and bi-directional link is observed between energy use and CO2  emissions. The strength of this link is twice bigger in OPC than in ORC. This indicates that CO2 reduction policies conducted through energy use control (quantitative and qualitative) will have higher effect in OPC than in ORC. This also shows that the relationships between economic growth, energy use and CO2  emissions differ noticeably and structurally between OPC and ORC. These results provide new insights into the opportunities and threats faced by CO2 reduction policies in OPCs and ORCs.

The Comparative Economics of ICT, Environmental Degradation and Inclusive Human Development in Sub-Saharan Africa

This study examines how information and communication technology (ICT) could be employed to dampen the potentially damaging effects of environmental degradation in order to promote inclusive human development in a panel of 44 Sub-Saharan African countries. ICT is captured with internet and mobile phone penetration rates whereas environmental degradation is measured in terms of CO2 emissions per capita and CO2 intensity. The empirical evidence is based on fixed effects and Tobit regressions using data from 2000 to 2012. In order to increase the policy relevance of this study, the dataset is decomposed into fundamental characteristics of inclusive development and environmental degradation based on income levels (low income vs. middle income); legal origins (English Common law vs. French Civil law); religious domination (Christianity vs. Islam); openness to sea (landlocked vs. coastal); resource-wealth (oil-rich vs. oil-poor) and political stability (stable vs. unstable). Baseline findings broadly show that improvement in both of measures of ICT would significantly diminish the possibly harmful effect of CO2 emissions on inclusive human development. When the analysis is extended with the above mentioned fundamental characteristics, we observe that the moderating influence of both our ICT variables on CO2 emissions is higher in the group of English Common law, middle income and oil-wealthy countries than in the French Civil law, low income countries and oil-poor countries respectively. Theoretical and practical policy implications are discussed.

The Comparative Economics of ICT, Environmental Degradation and Inclusive Human Development in Sub-Saharan Africa

This study examines how information and communication technology (ICT) could be employed to dampen the potentially damaging effects of environmental degradation in order to promote inclusive human development in a panel of 44 Sub-Saharan African countries. ICT is captured with internet and mobile phone penetration rates whereas environmental degradation is measured in terms of CO2 emissions per capita and CO2 intensity. The empirical evidence is based on fixed effects and Tobit regressions using data from 2000 to 2012. In order to increase the policy relevance of this study, the dataset is decomposed into fundamental characteristics of inclusive development and environmental degradation based on income levels (low income vs. middle income); legal origins (English Common law vs. French Civil law); religious domination (Christianity vs. Islam); openness to sea (landlocked vs. coastal); resource-wealth (oil-rich vs. oil-poor) and political stability (stable vs. unstable). Baseline findings broadly show that improvement in both of measures of ICT would significantly diminish the possibly harmful effect of CO2 emissions on inclusive human development. When the analysis is extended with the above mentioned fundamental characteristics, we observe that the moderating influence of both our ICT variables on CO2 emissions is higher in the group of English Common law, middle income and oil-wealthy countries than in the French Civil law, low income countries and oil-poor countries respectively. Theoretical and practical policy implications are discussed.

The Comparative African Economics of Inclusive Development and Military Expenditure in Fighting Terrorism

Abstract This study investigates the role of inclusive human development and military expenditure in fighting terrorism in 53 African countries for the period 1998-2012. The empirical evidence is based on contemporary, non-contemporary and instrumental variable Fixed Effects regressions. Inclusive development is not a sufficient condition for the fight against terrorism whereas military expenditure can be effectively employed to mitigate the phenomenon. Significant negative effects are established only when endogeneity is accounted for by means of non-contemporary and instrumental-variables approaches. Hence, the policy effectiveness of employed tools is contingent on whether they are engaged proactively (i.e. non-contemporarily) or not. From the findings, the propensity of military expenditure to fight transnational terrorism is higher in: (i) middle income countries vis-à-vis their low income counterparts; (ii) oil-rich countries compared to oil-poor countries and (iii) Christian-dominated countries vis-à-vis their Islam-oriented counterparts. Furthermore military expenditure is also more effective at combating domestic and transnational terrorism in: (i) North African countries vis-à-vis their sub-Saharan Africa counterparts; (ii) landlocked countries compared to countries that are open to the sea and (iii) politically-stable countries vis-à-vis their politically-unstable counterparts. Contributions to the comparative economics are discussed. Practical and theoretical contributions are also provided.

Endogenous growth, asymmetric trade and resource dependence

The aggregate income of oil-exporting countries relative to that of oil-poor countries has been remarkably constant in recent decades, despite the existence of structural gaps in productivity growth rates. This stylized fact is rationalized in an endogenous growth model of asymmetric trade where resource-poor and resource-rich economies display productivity differences but stable income shares due to terms-of-trade dynamics. The model yields two testable predictions that deserve empirical scrutiny: (i) the asymmetric impact, between exporters and importers, of national taxes on resource use on income shares and (ii) the inverse relation between terms-of-trade dynamics and total factor productivity growth.

The Brazilian Experience with Biofuels (Innovations Case Narrative)

biofuels in the internal combustion engines on our roads. In the late 1800s, Henry Ford used ethanol to drive automobiles and Rudolf Diesel used biodiesel from peanuts to drive trucks. But these fuels were replaced in the early 1900s by gasoline and diesel oil distilled from petroleum; they became cheap and seemingly inexhaustible in the United States and a few other countries with easy access to oil. Meanwhile biofuels, particularly ethanol (also an alcoholic beverage), were expensive and produced in minor amounts compared to the huge quantities needed for large vehicle fleets. Oil-poor countries, including Brazil, had a different experience. Since 1920, Brazilians have conducted technical studies on ethanol-run vehicles, including racing cars; because ethanol works so well as a fuel it makes a good alternative to imported gasoline. In 1931, a Brazilian law required that all gasoline include 5 percent bioethanol from sugarcane and the government regulated prices to make it possible. Over the years the blend remained almost constant and was slowly raised to 7.5 percent. Such blends did not require changes in the engines. In the early 1970s, Brazil imported all of its gasoline and petroleum from abroad, at an annual cost of U.S. $600 million. In 1973, with the first oil shock, imports rose to more than $4 billion annually, contributing greatly to the deficit in hard currency and badly damaging the economy.

Resource Curse or Rentier Peace? The Ambiguous Effects of Oil Wealth and Oil Dependence on Violent Conflict

The ‘resource curse’ hypothesis claims that abundance in natural resources, particularly oil, encourages especially civil war. Natural resources provide both motive and opportunity for conflict and create indirect institutional and economic causes of instability. Contrarily, the theory of the rentier state — largely neglected in the study of peace and war in this respect — suggests that regimes use revenue from abundant resources to buy off peace through patronage, large-scale distributive policies and effective repression. Consequently, such rentier states would tend to be more stable politically and less prone to conflict. These two theories thus imply ambivalent effects of resource abundance on conflict proneness. This article presents part of a solution to this apparent puzzle for the case of oil-producing countries. The key argument is that both resource wealth per capita and resource dependence need to be taken into account, since only the availability of very high per capita revenues from oil allows governments to achieve internal stability. The empirical analysis supports this hypothesis. The findings of multivariate cross-country regressions indicate a U-shaped relationship between oil dependence and civil war onset, while high resource wealth per capita tends to be associated with less violence. The results of a macro-qualitative comparison for a reduced sample of highly dependent oil exporters are even more clearcut. Using the same reduced sample, we find that oil-wealthy countries apparently manage to maintain political stability by a combination of large-scale distribution, high spending on the security apparatus and protection by outsiders. Compared to oil-poor countries and in contradiction to the rentier state theory, the institutions of oil-wealthy countries do not seem to be particularly characterized by patronage and clientelism.