Resource-Economic Growth Nexus, Role of Governance, Financial Development, Globalization, and War: A Dynamic Approach

Abstract

This study reassesses the resource-economic growth nexus by incorporating several channels. Panel time series techniques are used to analyze panel time series data from 1980 to 2015 in 31 oil-rich countries. The results show that oil rent augments economic growth; thus, oil rent is conducive for, rather than an impediment to, economic growth. The role of governance in economic growth is significant in the examined countries. Financial development is an unimportant channel in the resource-growth nexus because it is often unable to mobilize oil rent from the government to the private sector in oil-rich countries. Globalization is advantageous for countries as it promotes economic growth. Finally, war exerts a significant negative effect on growth in the long term.

Islamic finance and economic growth: Global evidence

“…However, one‐way causality runs from financial development to economic growth, while GDP causes Islamic finance development. For oil‐rich economies (31 countries), financial development turned unimportant, while oil rent and governance proved significant for economic growth in a study conducted by Jalili et al (2019) for the period 1980–2015. Bara et al (2016) conducted an interesting study on 15 Southern African Development Community (SADC) countries, covering the period 1985–2014 through the application of GMM estimation.…”