The Linkage between the Oil and Non-oil Sectors : A Panel VAR Approach

WPIEA2010118 Image
Price:  $18.00

Author/Editor: Nir Klein
Release Date: © May, 2010
ISBN : 978-1-45520-077-1
Stock #: WPIEA2010118
Stock Status: On back-order

Languages and formats available



Recent empirical studies have shown an inverse relation between natural resource intensity and long-term growth, implying that the natural resources generally impede economic growth through various channels (the “natural resource curse”). This paper departs from these studies by exploring the intersectoral linkages between oil and non-oil sectors in a cross-country perspective. The paper shows that the applicability of “natural resource curse” across oilbased economies should be treated with caution as the externalities of the oil sector highly depend on the countries’ degree of oil-intensity. In particular, the results show that, in low oil-intensity economies, the incentives to strengthen both fiscal and private sector institutions lead to positive inter-sectoral externalities. In contrast, weaker incentives in high oil-intensity economies adversely affect fiscal and private sector institutions and consequently lead to negative inter-sectoral externalities.


Economic policy , Political economy

More publications in this series: Working Papers

More publications by: Nir Klein