Oil-rich Countries Research Articles

New cities for a ‘new Kuwait’: planning for national continuity and stability

ABSTRACT An unprecedented new city-building boom is unfolding in Kuwait, with 12 new cities currently underway. As an oil-rich country, Kuwait faces imminent challenges, including peak oil and climate change, which threaten national wellbeing, continuity, stability, and even survival. As a welfare state guaranteeing housing to citizens, Kuwait shares oil wealth, fundamentally shaping urban planning and spatial development. The current national city-building strategy aims to address housing shortages while reducing reliance on oil. Despite the resources allocated to these projects, Kuwait's city building and its relationship to national economic development strategies has received little scholarly attention. This article introduces the 12 new city projects underway, and examines the main actors driving this trend, how new cities connect to the state's development logic for future-proofing the country, and how national sustainability goals and the state's Vision 2035 for a ‘new Kuwait’ shape these projects. Finally, we reflect on the challenges these projects face.

A pathway to urban sustainability: Understanding the challenges of unpopulated allocated residential lands in Oman

The right to adequate housing is recognized as fundamental human right as per the UN 2030 Agenda for Sustainable Development. It is globally agreed that access to land is the core foundation for realizing the right to housing. However, policies related to access-to-land right has varied between different countries resulting in multiple urban challenges. Several oil-rich countries, such as Oman, address access-to-land right by means of land-allocation. In Oman, lottery system is used whereby citizens participate to get a residential plot form the government for minimum fees. This particular policy has resulted in a large number of land plots being unbuilt, which in turn resulted in fragmentation in cities.To address this issue a facilitated interactive focus group study, based on the social constructivism paradigm, was conducted in Oman aiming at identifying the factors that influence individuals' decision to build on the allocated land. The study concludes by identifying obstacles that prevent citizens from making building decision after receiving the land, which are in order of their significance: Need, Financial Capability, Location, Services and Neighborhood Quality. This will provide evidence-based guidelines for policy makers to overcome this challenge and achieve better urban sustainability aligned with the country's 2040 vision.

Unveiling the Dutch Disease Indexes: Principal Component Analysis in a Small Oil-rich Country

The Dutch disease (DD) theory is a popular approach when analyzing the economies of resource-rich countries. However, despite the extensive examination of both the original DD theory and its variations in numerous country cases, the findings remain contradictory and inconclusive, primarily due to the challenges associated with measuring DD. Building upon the notable case study of the Azerbaijani economy, this paper introduces a novel way to utilise principal component analysis (PCA) in index development, which incorporates the modelling framework of the original theory and provides a profound understanding of DD measurement. The findings of the study reveal that the fundamental variables associated with DD in the Azerbaijani economy can be effectively condensed into a small number of principal components (PCs). In addition, this research introduces not only a total Dutch disease index (TDDI), but also a resource movement index (RMI) and a spending index (SI), with the last of these demonstrating a more pronounced impact in Azerbaijan. The estimated indexes exhibit a significant and negative correlation with the manufacturing sector’s share in the industry, pointing to the presence of the crowding-out mechanism of DD. Moreover, a strong positive correlation is observed with key growth indicators such as gross domestic product (GDP) and gross capital formation, underscoring the exceptional role of the oil boom in the Azerbaijani economy. These findings justify the contention that DD is present in the Azerbaijani economy. The paper also provides a composite index that can be utilised by both policymakers and scholars for measuring DD.

The Impact of Resource Revenue on Non-Resource Tax Revenue in Oil-Exporting Countries: Evidence from Nonlinear Analysis

The main objective of this study was to examine the asymmetric effect of resource tax revenues on non-resource ones in oil-rich countries, as most previous research on the subject has assumed a symmetric resource-non-resource tax revenue nexus. We employed linear ARDL model to analyze the short- and long-term effects and found a negative relationship between resource and non-resource tax revenues. Based on nonlinear ARDL model estimates, empirical results provide strong evidence for the asymmetric effect of resource tax revenues. In the long-run, positive shocks have negative impacts on non-resource tax revenues. Conversely, negative shocks were found to not lead to increased non-resource tax revenues. In addition, findings show that the short-term effects are stronger when resource tax revenues increase.

PETROLEUM ENERGY CONSUMPTION, TRADE OPENNESS AND FOREIGN DIRECT INVESTMENT: A TRIPARTITE APPROACH TO ECONOMIC GROWTH IN NIGERIA

Nigeria is an oil-rich country with a significant reliance on petroleum consumption. This study examines the tripartite effects of petrol final energy consumption, trade openness, and foreign direct investment on economic growth in Nigeria over the period 1990-2021. The unit root results and the number of data points at the disposal of this study permit the application of ARDL econometric estimation technique. The short-run and long-run estimated parameters indicate that there are impacts of petroleum consumption, Foreign Direct Investment (FDI) and trade openness on economic growth in both short-run and long-run in Nigeria. In the long run, petroleum consumption (0.3762%), trade openness (0.2272%) and FDI (0.1271%) have a positive and significant impact on economic growth. The coefficient of the error correction term is negative and statistically significant. This implies that the model is mean-reverting, and that the short run model tends to revert to its long-run equilibrium value over time in the event of disequilibrium at the speed of 63% per annum. The model is robust for policy making as it passed diagnostics tests, no evidence of serial correlation, no evidence of heteroskedasticity, no evidence of model misspecification, there is dynamic stability via Cusum and Cusum of Square and the residuals are normally distributed as evidenced from Jarque-Bera statistics. Based on the statistically significant positive impacts of petroleum energy consumption, trade openness and foreign direct investment, this study suggests that policies aimed at increasing petroleum consumption, FDI and trade openness are going to lead to increase in economic growth in Nigeria.

Energy shock, industrial transformation and macroeconomic fluctuations

This paper analyzes the impact of coal shock and oil shock on China's macro economy by constructing SVAR model, and clarifies the impact mechanism of the two shocks and corresponding countermeasures by constructing a small open DSGE model. We find that: 1) The impact of exogenous coal impact mainly affects the total output by influencing thermal power generation. Due to the incomplete release of power price in China, under the impact of exogenous coal, the rise of thermal power generation cost will lead to the decline of thermal power generation, which will lead to the shortage of power supply for industrial production and the decline of output. 2) Exogenous oil shock mainly affects total output by influencing monetary policy. Different from coal, oil is widely used and its price rise has a significant impact on industrial product prices, which will lead to a certain degree of monetary policy contraction and total output decline. 3) According to the counterfactual analysis and welfare analysis, we find that the exogenous coal shock can be mitigated by reducing the external dependence of coal and industrial green transformation. At the same time, the exogenous oil shock can be mitigated by establishing strategic cooperation and industrial green transformation with oil-rich countries. This paper has certain policy implications for Chinese government departments to promote industrial green transformation and improve energy security.

Factors influencing intention to use hybrid electric vehicles in an oil-rich country: from vehicles market managers' perspective

Factors influencing intention to use hybrid electric vehicles in an oil-rich country: from vehicles market managers' perspective

The Economic Diversification and Sustainability Development in Oil-Rich Countries: A Panel Data Study

The Economic Diversification and Sustainability Development in Oil-Rich Countries: A Panel Data Study

Economy-wide and environmental benefits of green energy development in oil-rich countries: Evidence from Azerbaijan

Azerbaijan, which is an oil/ gas-rich country, has been taking full advantage of its energy potential and taking steps towards creating green energy and turning it into an export. The Green Energy Corridor, in which Azerbaijan plays the main role, aims to connect Azerbaijan with Europe in its first stage. In the second stage, this corridor will connect Central Asia with Europe, which will involve the laying of an electric cable under the Black Sea and the Caspian Sea. This will allow Azerbaijan and other Central Asian countries to export zero-carbon electricity to the European market. If Azerbaijan is successful in this field, it will not only serve the sustainability of the country?s economy in the post-oil era, but will also contribute to the reduction in carbon emissions, leading to global benefits. The aim of this article is to assess the socioeconomic, ecological, and political benefits of green energy deployment in Azerbaijan. An economic cost-effectiveness analysis was conducted for selected green energy projects (large-scale wind and solar power plants). We also argue that green transition projects, which seem expensive and difficult to realise today, will be justified in the near future.

Factors influencing intention to use hybrid electric vehicles in an oil-rich country: From vehicles market managers' perspective

Factors influencing intention to use hybrid electric vehicles in an oil-rich country: From vehicles market managers' perspective

Corrigendum

CORRECTION TO THE PAPER GASIMLI, V., HUSEYN, R, & HUSEYNOV, R. (2024) Some terminological inaccuracies have been identified in the article ?Economywide and environmental benefits of green energy development in oil-rich countries: Evidence from Azerbaijan? published Economic Annals, 2024 69(241):41-64. https://doi.org/10.2298/EKA2441041G. The sentence on page 42 ?It is attempting to implement a mega project that involves laying a pipeline under the Black Sea to export renewable energy to Europe after using it for oil and natural gas? corrected as below: ?It is attempting to implement a mega project that involves laying a cable under the Black Sea to export renewable energy to Europe?. <br><br><font color="red"><b> Link to the corrected article <u><a href="http://dx.doi.org/10.2298/EKA2441041G ">10.2298/EKA2441041G</a></b></u>

Does Crude Oil Price, Financial Development, and Trade Openness Reflect on African Oil-Rich Countries’ Economic Growth?

Does Crude Oil Price, Financial Development, and Trade Openness Reflect on African Oil-Rich Countries’ Economic Growth?

Азербайджанский цифровой центр: стратегия в действии

The article explores the digital transformation landscape under pandemic and post-pandemic conditions. As global internet traffic continues to surge, nations worldwide are prioritizing digital strategies to keep pace with this rapid transformation. Azerbaijan, an oil-rich country seeking economic diversification, has taken a strategic approach to become a key player in the digital landscape. Neqsol Holding, utilizing its capital from the oil and gas industry, initiated the Azerbaijan Digital Hub, a comprehensive program comprising the Digital Silk Road, a Regional Data Center, an Internet Exchange Point, and the development of a digital ecosystem. The hub aims to reshape the internet map along the Silk Way and thrive amidst disruptive changes through three consecutive stages: ideation, incubation, and scaling. The article highlights the strategic choices made by Azerbaijan in establishing the Digital Hub and its potential impact on the nation's economy. It presents the shift from the «Castles» quadrant to the «Connectors» quadrant, adopting new power models and values for sustainable growth. The dynamic capabilities of the Digital Hub are explored, emphasizing its transformative nature and adaptability to rapid technological advancements. In conclusion, the article suggests that the success of the Azerbaijan Digital Hub depends on effective management of continuous change, fostering a culture of innovation, and leveraging strategic advantages through mergers, alliances, and investments. By navigating a complex and uncertain environment, the Digital Hub can solidify its position as a crucial player in the digital era.

THE RELATIONSHIP BETWEEN TOURISM AND GENDER EQUALITY - AN ANALYTICAL STUDY OF SELECTED COUNTRIES

The research aims to study the relationship between tourism and gender equality for a selected group of Asian countries (Thailand and the Maldives), developed countries (Japan and Israel), developing countries (China and India) and some oil-rich countries (Qatar, Saudi Arabia, the Arabian Peninsula), and the Philippines, with its high index of gender equality. gender, and Yemen and Jordan, which ranks last in the world) and using the PVAR model for the period (2006-2019), where the results of the causal test showed that there is a causal relationship between tourism and gender equality, and we found that there is a long-term balance relationship between tourism and gender equality. In the short term, this relationship did not appear. The other three variables, including economic growth, employment and education, were also analyzed to influence tourism and had a positive impact.

Effects of Oil Price Shock on the Exchange Rate of National Currencies in Oil-Rich Countries: In the Case of some Arab Countries and Azerbaijan

In the article, the effects of oil price changes on inflation and the exchange rate in Saudi Arabia, Iraq, Kuwait, and UAE, as well as in Azerbaijan, were econometrically assessed. The comparison between Azerbaijan and these Arab countries was made because oil revenues play an important role in the economy of these countries, but its effects are different. Saudi Arabian riyal, Iraqi dinar, Kuwaiti dinar, and UAE dirham depend on oil prices in the world market for the long run. In the short run, there is no such dependence. It is confirmed that Azerbaijani manat is dependent on oil revenues for the long run. Addiction is not felt in the short run. In the oil-rich Arab countries and Azerbaijan, the non-dependence of the national currency on the world market on oil prices is due to the state regulation of the national currency’s exchange rate in these countries. In none of these countries is the national currency liberal, and its exchange rate is not determined by supply and demand in the market.

Adsorptive removal of volatile petroleum hydrocarbons from aqueous solution by zeolite imidazole framework (ZIF-8) and iron oxide (Fe3O4) nanoparticles

Volatile petroleum hydrocarbons (VPHs), including pentane, ethylbenzene, methyl tert-butyl ether, toluene, and n-hexane, are often found on the surface and underground water due to industrial activities. As such the removal of VPHs is crucial by a vital task that requires great attention, especially in oil-rich countries. Thus, in this study, the adsorptive removals of VPHs from an aqueous solution by zeolite imidazole framework-8 (ZIF-8) and iron oxide nanoparticles (IONs) were investigated. The characterization results revealed that ZIF-8 has a higher surface area, and larger pore volume, and is more thermally stable than IONs. Fourier transform infrared spectra have found peaks corresponding to functional groups such as Zn-N, C-N, C-H, and CN in ZIF-8 and Fe-O and hydroxyl groups in IONs confirming the successful synthesis of the adsorbents nanoparticles. Furthermore, the zeta potential values were − 10 mV and − 17 mV for ZIF-8 and IONs, respectively; suggesting good stability while Brunauer, Emmett, and Teller (BET) specific surface area results revealed that both adsorbents have a high surface area of 1268 m2/g for ZIF-8 and 130.8 m2/g for IONs. The optimum pH for the removal of VPHs for both adsorbents was observed to be pH 8, with the highest removal efficiency reaching 82.2% and 63.6% for ZIF-8 and IONs, respectively. Isotherm model studies revealed that the adsorption data was best fit using the Langmuir model indicating monolayer adsorption. The maximum adsorption capacities (Qm) of VPHs onto ZIF-8 was 5.51 mg/g and onto IONs was 1.459 mg/g at 45◦C, respectively. Lastly, the thermodynamic studies revealed that the reaction was endothermic, spontaneous, and had a good affinity. The results demonstrated the great potentiality of ZIF-8 application as a benchmark adsorbent for the removal of VPHs compounds. In this study for the first time, the wide matrix of VPHs was attempted to be removed from a real wastewater sample using ZIF-8 and IONs. The results designate that ZIF-8 and IONs as good adsorbents for the removal of a wide range of VPHs from a water matrix.

From Rents to Welfare: Why Are Some Oil-Rich States Generous to Their People?

Why do some, but not all oil-rich states provide generous welfare to their populations? Building on a case study of Oman in the 1960s and 1970s, we argue that anti-systemic subversive threats motivate ruling elites in oil states to use welfare as a tool of mass co-optation. We use the generalized synthetic control method and difference-in-difference regressions for a global quantitative test of our argument, assessing the effect of different types of subversion on a range of long-term welfare outcomes in oil-rich and oil-poor states. We demonstrate that the positive effect of subversion appears limited to center-seeking subversive threats in oil-rich countries. The paper addresses a key puzzle in the literature on resource-rich states, which makes contradictory predictions about the impact of resource rents on welfare provision.

Are resource-rich countries less responsive to global warming? Oil wealth and climate change policy

Environmental degradation is recognized as a major threat to sustainable and inclusive development and therefore requires a rapid and effective political response. Political will to tackle the problem is essential, although there are wide variations in this commitment between countries. With the aim of understanding why some countries would be more committed to developing climate policies than other, this article examines whether oil dependence explains differences in the development and implementation of climate change policies. Additionally, this study investigates mechanisms through which oil wealth affects climate change policies. Our empirical analysis is based on the two-stage instrumental variable (IV-2SLS) method. The empirical findings using data for up to 82 countries suggest that oil abundance and dependence individually have a negative and significant effect on climate change policies. Thus, oil-rich countries are, on average, less inclined to adopt and implement strict policies to combat climate change. In addition, mediation analysis reveals that oil dependence has an indirect negative effect on climate change policy through its impact on corruption, democracy, women's political participation, and financial development. These findings shed new light on how oil wealth affects environmental policy outcomes and can help policymakers identify obstacles to the adoption of climate change policies.

Procyclicality of fiscal policy in oil-rich countries: Roles of resource funds and institutional quality

Fiscal policy management in natural resource-rich countries, particularly the ones struggling with inadequate institutional quality, faces significant challenges because of the dependence of government expenditures on highly volatile revenues of their natural resources. To resolve this issue, most of them have set up natural resource funds; however, the effectiveness of these funds is under debate. Large government expenditures financed by transfers from these funds are not highly likely sustainable and may entail long-term severe economic risks. That brings the necessity of detailed analyses of resource-rich countries' fiscal policy management by integrating the effects of the natural resource funds. This study puts a step forward in this direction; it takes 32 oil-rich countries for the period 1984–2015. Then it analyzes their fiscal policies regarding their government expenditures by unravelling the effects of the presence of the natural resource funds and the adequacy levels of their institutional qualities, categorized with the clustering algorithms. It uses dynamic panel data analysis and elaborates on the proper estimation techniques by considering cross-sectional dependence among data of these countries, heterogeneity of slope coefficients and endogeneity issues. The study reveals that even after controlling the effects of the volatility of the oil price changes and the share of oil rents in total income, resource-rich countries' fiscal policy goes with the flow. In favourable economic conditions, government expenditures are soaring, but when economic downturns happen, their growth levels also turn down. That means high fiscal procyclicality even in the presence of natural resource funds. As expected, the presence of these funds is not sufficient. For the desired countercyclical policy, adequately high enough institutional quality is needed to manage those funds and fiscal policy effectively.

The Impact of Foreign Direct Investment and Oil Revenue on Economic Growth in Nigeria

Abstract Many emerging economies, particularly oil-rich countries such as Nigeria, have neglected the key drivers of growth, and consequently resulting in a decline in investment and employment. In the midst of this, the current study sought to examine the extent to which foreign direct investment and oil revenue impact Nigerian economic growth. The estimation was done using ordinary least squares (OLS) techniques, and the Granger causality test was used to determine the direction of causality between FDI, oil revenue, and economic growth using annual time series data from 1991 to 2019. Hence, recognising that annual time series are high-frequency data, all the variables were subjected to OLS assumptions. The empirical findings revealed that FDI and oil revenue significantly impacted growth. Accounting for the impact of economic activities reflected in the role of financial inflow and outflow on economic growth, a significant and positive relationship was found. This implies that international monetary transactions between entities captured in the current account balance are key determinants of growth in Nigeria. Further evidence revealed that variables such as real exchange rate, inflation and interest rates significantly determine economic growth in Nigeria. As such, this finding was further supported by their interactive effects, revealing an inverse and significant influence on economic growth. The Granger causality results show bidirectional causality between oil revenue and growth, as well as between oil revenue and foreign direct investment in Nigeria. The robustness test, which employs GDP per capita and GDP growth as proxies for economic growth, is consistent with empirical evidence. As a result, FDI and oil revenues are important drivers of Nigeria's growth, ceteris paribus.