csae-wps-2016-19.pdf (1.6 MB)
Oil discovery, political institutions and economic diversification
report
posted on 2023-06-09, 03:04 authored by Nouf Alsharif, Sambit BhattacharyyaSambit BhattacharyyaClassical theory predicts that petroleum rich countries would specialise in petroleum products. Yet diversification is touted as a desirable policy objective for petroleum rich nations because it reduces exposure to volatility. Given such theoretical ambiguity, it is important to understand the empirical relationship between petroleum and diversification. In this paper, we test the effect of giant oil discoveries on diversification using a panel dataset covering up to 136 countries and the period 1962 to 2012. After controlling for country and year fixed effects, we find evidence of non-oil export concentration 8 years after a discovery. However, we do not observe any effect on the structure of employment in the non-resource and manufacturing sectors. It appears that democratic political institutions moderate the export concentration effect of petroleum discovery. Countries with weak political institutions experience employment concentration in the non-tradable sector post discovery.
History
Publication status
- Published
File Version
- Published version
Publisher
Centre for the Study of African Economies, University of OxfordPages
41.0Place of publication
Oxford, UKDepartment affiliated with
- Economics Publications
Institution
Centre for the Study of African Economies, University of OxfordFull text available
- Yes