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SPATIAL ANALYSIS OF OIL REVENUES ON THE ECONOMIC GROWTH OF SELECTED OIL EXPORTING COUNTRIES PHD STUDENT IN ECONOMICS, DEPARTMENT
Abstract
Slow Slow economic growth of countries with oil resources and better macroeconomic performance of poor countries in terms of natural resources is an unexpected phenomenon in economic development literature. In recent decades, oil-based economies have enjoyed slow, fluctuating, and even negative economic growth despite earning a lot of foreign exchange earning. Pessimism about the development based on oil resources comes from the fluctuation in the price of these resources, either due to changes in demand or their downward supply. Studies show that the slow economic growth of countries with oil resources, even after controlling the global price trend of these resources, is an empirical fact. Many poor countries still have abundant oil resources. Therefore, policymakers and economists need to investigate the reasons for the failure of economic growth based on the abundance of oil resources .Economists do not have a single opinion in answering the question of why countries benefiting from oil resources with high incomes have a low economic growth rate. Some believe that the backward and forward relations caused by the export of primary goods to the economy compared to factory industries, as opposed to the production of oil resources, lead to a more complete division of labor and improvement of the standard of living. On the other hand, some people believe that the abundance of oil resources and the incomes from it has caused the spread of the incorrect approach of some governments to the economy. These governments do not use policies based on free trade and this is an important factor in their low economic growth. The negative consequences of rent-seeking behavior in the economy, disruption in the optimal allocation of oil resources, loss of productivity, and disruption among productive activities are important factors of low economic growth. The decrease in the price of oil greatly reduces the government’s income. This, while facing the country with a budget deficit, on the other hand, has caused a reduction in construction costs, which slows down the implementation of construction and infrastructure projects, and the first effect of this is the emergence of a large number of projects. It will be half-finished in the construction sector, which will lead to stagnation and unemployment. On the other hand, with the reduction of revenues and government borrowing from the banking system, the growth of liquidity and the increase of the general level of prices happen. On the other hand, the increase in the price of oil increases oil revenues and generally, the government budget is adjusted in an expansionary manner, which leads to the phenomenon of Dutch disease in the economy. Therefore, fluctuations (increase or decrease) in oil prices, directly and indirectly, affect the overall economic situation and always cause negative shocks to the performance of macroeconomic variables, and increase the structural vulnerability of the economy. On the other hand, according to the statistics and information from the World Economy website, the average income from oil sales as a percentage of the GDP for selected oil exporting countries during 2019-2008 for Libya was 43.89, Congo 43.45, Kuwait 42.14,
Iraq 39/62, Oman 24/88, Saudi Arabia 24/24, Iran 22/11, Azerbaijan 21/86, Gabon 20/32, Chad 17/79, Qatar 16/91, UAE 16/20, Algeria 14/39 Kazakhstan 13/84, Turkmenistan 10/21, South Sudan 7.36, Yemen 5/28, Egypt 5/14, Sudan 3/60, Cameroon 2/80, Bahrain 2/15, Mongolia 2/04, Tunisia 1/71, Georgia 03 0.001, Syria is 0.0001%, but the economic growth rate in terms of GDP for the mentioned countries, except for Qatar, which was around 7%, for other selected countries, the economic growth rate was around 1-3%, while that the countries of Libya, Syria, and Sudan have a negative economic growth rate. Therefore, on the one hand, considering the high oil revenues for the selected oil exporting countries, and on the other hand, considering the low and even negative economic growth rate, to deal with the fluctuations of oil price shocks for the above countries and the spillover of oil revenues to achieve improvement. The better the infrastructure and economic development of the target and nearby areas, the freedom from dependence on oil revenues for the central and neighboring countries is necessary, the reasons for the weak performance of macroeconomic variables, including the economic growth rate based on the abundance of oil revenues with the proximity and spatial effects of the case be reviewed. Therefore, the aim of this research is the spatial analysis of oil revenues on the economic growth of selected oil exporting countries from 2008-2019. Before estimating the spatial model, spatial spillover effects for the spatial Durbin model were confirmed by using Moran’s, Jerry C’s, Jetis’s, and Akaike’s tests of spatial diagnostic dependence. The results of this study, in the framework of combined spatial data and based on the estimation of the space Durbin, showed that oil revenues and their proximity effects have negative effects on the economic growth of oil exporting countries. From other research results, population variables and inflation rates have a negative effect on the economic growth of the above countries, while the foreign direct investment variable has a positive effect on economic growth. Based on the results of the research, it is suggested that to achieve a high and stable economic growth rate, adopting policies to reduce the economy’s dependence on oil revenues, reduce expenditures and the size of the government in the budget, and strengthen the industry sector and the spillover of oil revenues for the development of infrastructures. This section is recommended.
Keywords: Oil price, Economic growth, Selected countries, Spatial effects.