The Transmission Channels of Oil Revenues on Economic Growth of Iran

Document Type : Research/Original/Regular Article

Authors

1 Assistance Professor of Economics, Ayatollah Boroujerdi University

2 MA in Economics, AllameTabatabai University

10.30507/jmsp.2018.68825

Abstract

Resource curse hypothesis is one of the most complex theories, which is based on Popper's fictitious science methodology in economics and economists designed different models to test this hypothesis. But the contradictory experiences in different countries did not prevent the hypothesis from becoming a law and even a theory. The purpose of this study was to evaluate the effects of oil revenues channels on Iran's economic growth during 1979-1959 using the Sakhs and Warner model. The results showed that oil revenues alone are not detrimental to economic growth and have a direct positive effect on Iran's economic growth. But when according to Sachs and Warner's proposed model, other explanatory variables such as physical investment, the degree of openness of the economy, the relationship of exchange and human capital are introduced into the channels of influence, due to the effect of oil revenues onthese variables and then the indirect negative impact on economic growth, The effect oftotal oil revenues on growth is sharply reduced and much less than the initial value. The result also showed that the increase ofphysical investment, the degree of openness of the economy and the promotion of human capital, has a positive effect and increasing the exchange relationship has a negative effect on Iran's economic growth. In addition, the significance andtype of effect of each channel on economic growth was determined and it was observed that except for the human capital channel, the indirect effect of oil revenues on Iran's economic growth from each channel was negative.

Keywords

Main Subjects

References

Akanni, O.P. (2007). “Oil Wealth and Economic Growth in Oil Exporting African Countries, African Economic Research Consortium”. AERC Research,  21(7), 170-191.
Auty, R. (1994). Resource Abundance and Economic Development. Oxford and New York: Oxford University Press.
Bahrami, J., & Nasiri, S. (2011). “Oil shock and Dutch disease: The case of Iran”. Iranian Journal of Economic Research, 48, 25-54. (Persian)
Baro, R., & Sala-i-Martin, X. (1995). Economic Growth. New York: McGraw Hill.
Barro, R. (1997). Determinants of Economic Growth: A Cross Country Empirical Study. Massachusetts: MIT Press.
Bategeka, L., & Matovu, J.M. (2011). “Oil Wealth and Potential Dutch Disease Effects in Uganda”. Economic Policy Research, 16(3),75-89.
Bruckner, M. (2010). “Natural Resource Dependence, Non-Tradable, and Economic Growth”. Journal of Comparative Economics, 38, 461-471.
Carmignani, F., & Avom, D. (2010). “The Social Development Effects of Primary Commodity Export Dependence”. Ecological Economics, 70, 317-330.
Chi-yung, E. (2006). “Is Natural Resource Abundance Beneficial or Detrimental to OutpuT Level and Growth?”. Retrieved from: http://economics.ca/2006/papers/0831.pdf.     
Frederick van der Ploeg (2011). “Natural Resources: Curse or Blessing?”. Journal of Economic Literature, American Economic Association, 49(2), 366-420.
Gaskari, R., Eghbali, A., & Halafi, H. (2005). “Instability of exporting oil and economic development in Iran”. Iranian Journal of Economic Research, 7(24), 77-94. (Persian)
Gylfason, T. (2001a). “Natural Resource and Economic Growth: What Is The Connection?”. CES if Working Paper, 530. (in presss)
Gylfason, T. (2001b). “Natural Resources, Education and Economic Development”. European Economic Review, 45, 847-859.
Gylfason, T. Herbertsson, T.T., & Zoega, G. (1995). “A Mixed Blessing: Natural Resources and Economic Growth, Macroeconomic Dynamics”. Journal of Economic Ressearch, 3, 204-225.
Gylfason, T., & Zoega, G. (2001). “Natural Resource and Economic Growth: the Role ofInvestment”. CEPR Discussion paper, 27-43. (in presss)
Jahadi, M., & Elmi, Z. (2011). “Oil price shocks and economic development: Evidence from OPEC countries”. Quarterly Journal of Economic Growth and Development Research, 2, 11-40. (Persian)
John, R. (2010). “Is a Negative Correlation Between Resource Abundance and Growth Sufficient Evidence That There Is a Resource Curse?”. Resources Policy, 37(2), 275-301.
Karimzadeh, M., Nasrollahi, Kh., Samadi, S., Dalali Esfahani, R., & Faghar, M. (2009). “Analyzing the Dutch disease in Iran’s economy: The effect of exchange relation on the structure of investment”. Quantitative Economics, 6(23), 147-172. (Persian)
Kheirkhahan, J. (2003). Oil boom, savings, and the role of institutes: The case of Iran and Norway. PhD dissertation in Economics, Allameh Tabataba’I University, Tehran. (Persian)
Mauro, P. (1995). “Corruption Relationship Between oil Revenues and Oil- exporting Countries”. Journal of Energy policy, 36, 1164-1168.
Mehlum, M., & Torvik, R. (2002). “Natural Resource, Rent Seeking and Welfare”. Journal of Economic Development, 67(2), 455-470.
Mirtorabi, S. (2008). Issues of oil in Iran. Tehran: Ghoomes. (Persian)
Naderian, M. (2007). Analyzing the relationship between natural resource and economic development based on alternative investment model in Iran’s economy. MA Thesis in Economics, Tehran University, Tehran. (Persian)
Nazari, M., & Mobarak, A. (2010). “Rich natural resources, Dutch disease and economic development in oil-rich countries”. Energy Economics Review, 27, 47-68. (Persian)
Papyrakis, E., & Gerlagh, R. (2004). “The Resource Curse Hypothesis and Its Transmission Channels”. Journal of Comparative Economic, 32, 181-193.
Perbish, A.J. (1964). “The Macroeconomic Implications of a Resource Discovery in an Open Economy”. The Economic Journal,  42 (36), 285-299.
Ploeg, F. (2011). "Natural Resources: Curse or Blessing?”. Journal of Economic Literature, American Economic Association, 49(2), 366-420.
Rahmani, T., & Golestani, M. (2009). “Analyzing the curse of natural resources and rent seeking in income distribution of a selected oil-rich countries”. Economic Research, 89, 57-86. (Persian)
Reports on analyzing corruption. (2008). Corruption, democracy, and economic development (translated into Farsi by Reza Ghashghayi). Tadbir Institute of Economic Research, 2, 23-49. (Persian)
Rezayi, M., Yavari, K., Ezati, M., & Etesami, M. (2015). “Analyzing the effect of rich natural resources (oil and gas) on the financial repression and economic development via transmission channels in income distribution”. Journal of Iranian Energy Economics, 4(14), 89-122. (Persian)
Sachs, J., & Warner, A. (1995). “Natural Resource Abundance and Economic Growth”. NBER Working Paper, 5398. Cambridge, MA. (in press)
Sachs, J., & Warner, A. (1999). “The Big Push, Natural Resources Booms and Growth”. Journal of Development Economics, 59, 43-76.
Salai-i-Martin, X., & Subramanian, A. (2003). “Addressing the Natural Resource Curse: An Illustration from Nigeria”. NBER Working Paper, No. 9804. (in press)
Salarian, M. (2008). The effect of oil revenues on the economic development of oil exporting countries from the perspective of natural resource disaster. MA thesis in Economics, Bu-Ali Sina University, Hamedan. (Persian)
Sameti, M. (2007). “The effect of natural resource on the economy of OPEC and some selected countries”. Journal of Iran’s Economic Essay, 7, 55-84. (Persian)
Singer, S. (1950). “Booming Sector and De-Industrialisation in a Small Open Economy”. The Economic Journal, 52 (36), 825-848.
Stevence, P. (2003). “Resource Impact: A Curse or A Blessing?”. Centre for Energy, Petroleum and Mineral Law and Policy, 29(3), 174-199.
Stinigs, B. (2001). “Natural Resource Booms and Inequality: Theory and Evidence”. Scandinavian Journal of Economics, 113, 388-417.
Torvik, R. (2001). “Learning by Doing and Dutch Disease”. European Economic Review, 45: 295-316.
Yavari, K., & Salmani, B. (2005). “Economic development in countries rich with natural resources: The case of OEPC countries”. Iranian Journal of Trade Studies, 37, 89-122. (Persian)
Quarterly Journal of The Macro and Strategic Policies
Volume 8, Special Issue
February 2021
Pages 46-72

Files

Share

How to cite

Statistics