Oil Exports and Economic Growth: A Comparative Study

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Joshua J. Lewer

Abstract

The world’s essential need for oil and its sharp rise in real price during the1970’s and 2000’s suggests that petroleum exports may be a better stimulator foreconomic growth than other exports for developing countries. Using advanced time-seriestechniques, a simultaneous equations model is developed to examine the relationshipbetween oil exports and economic growth for ten petroleum producing countries over athirty year period. While the empirical results indicate that both oil exports and “non-oil”exports were significantly related to the economic development for over half of thecountries, the crude spot price had mixed growth results. Interestingly, the results of thispaper suggest that by focusing on their comparative advantage in producing petroleumrelated goods, oil-exporting countries receive benefits from international trade equal tothe size of their non-petroleum products and services. (F14, Q32, C32)

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