Oil Curse

The Soviet invasion of Afghanistan in December 1979 remains a deeply puzzling event. The action was uncharacteristic of Moscow's Third World policy and extremely self-destructive. Moreover, archival sources reveal that, just nine months earlier, the Politburo was strongly opposed to such an undertaking. Based on archival documents, this article examines what could have caused this sudden, reckless shift in policy, and attention is drawn to a hitherto overlooked factor. Guided by the “resource curse” literature, the possibility that the Soviet leadership may have been radically emboldened in their contemporary external outlook by the extraordinary surge in energy wealth that occurred during 1979 is analyzed.

This research considered the oil curse causes and effects in a long run worldwide and applies them to the case of Uganda’s emerging oil sector. This helped to tell whether the Uganda will avoid the oil curse and benefit from the oil sector sustainably. It was largely concentrate on how the country will manage the oil resources revenue for better results as Botswana has done. Further critical consideration of the oil resource curse literature in reference to how it fits in the Uganda’s sector of oil and gas. It is arranged in a way that will help the reader to get deep understanding of the oil curse and her history and he or she will see whether it fits Uganda oil and gas activities that have so far taken place. After all that, the reader will be able to tell whether the country will benefit or suffer the curse as Sachs and Warner wrote in 1995 that oil resources revenue do not match the economic performance of these resourced countries where he indicated countries like Nigeria, Venezuela, Libya, Sudan, DRC among others to have experienced this phenomenon.

Ghana discovered oil in June 2007 and commenced production in December 2010 under a peaceful democratic political order that is being hailed by all across the world as a beacon of hope. Based on a desktop review, this paper examines how oil affects politics and democratic development in Ghana. It argues that even though
there are efforts to protect Ghana from the ‘oil curse’ or potential adverse socio-economic effects of oil production, conscious efforts have not been made to check the possible impact of oil production on the nation’s democratic gains. Consequently, oil production has resulted in tendencies that undermine democratic development, including politics of resource-patronage; high spending on social services such as infrastructure; high borrowing that increases national debt; and high corruption and perception of corruption and security threats. The paper concludes with some theoretical
and policy implications of the findings for oil-producing countries in Sub-Saharan Africa.

The mining industry helps governments to increase revenues resulting in job creation, infrastructural development and enhancing the standard of living of the local communities. However, it is also a potential source of
environmental pollution and rent-seeking. This study examines the relationship between mineral rents and genuine income
in a multivariate panel data analysis in Botswana, Egypt, Ghana, Morocco, South Africa and Zambia at the aggregate and
industrial levels. The findings suggest that mineral revenues have been a blessing to these countries at the aggregate level
but affected industrial growth negatively. These findings support evidence in the literature that mineral resource abundance
slows growth in industrial output. The study also reveals that growth in mineral rich countries is principally driven by
investment in capital and energy consumption. It is therefore recommended that mineral revenues should be invested in
capital and alternative energy sources to boost aggregate and industrial growth.

There is an ongoing debate on the relationship between Islam, oil wealth and (lack of) democracy. Considerable literature shows that Islam, represented as an informal institution by Muslim population share, has a negative effect on democracy, especially in oil-rich economics. This study examines the effects of formal institutions, specifically constitutions that prescribe Shari'a law as a source of legislation, on democracy. We use a newly developed coding of the degree to which Islam is incorporated in constitutions. Our empirical results show the constitutional entrenchment of Islamic supreme values has a negative and significant effect on democracy. This relation remains robust when controlling for other variables, including Muslim population share, oil and gas rents, and per capita GDP as well as employing instrumental variable regressions. Our results show that Islamic constitutionalism, and not oil curse, is the main reason for democracy deficit in Muslim-majority countries. However, we find no evidence that Islam is inimical to democracy when not entrenched in the constitution.

Purpose
A widely held belief before the 1990s – referred to as the oil-blessing hypothesis – was that oil discovery and production should promote economic growth and development and lead to poverty reduction. However, the so-called ‘oil-curse’ hypothesis, postulated by Sachs and Warner in 1995, challenged this belief, thus provoking a heated debate on the theme. The oil-curse hypothesis has been traditionally tested by means of cross-sectional and panel-data models. The author goes beyond these traditional methods to test whether the presence of spatial effects can alter the hypothesis in oil-producing African countries. In particular, this paper aims to investigate the effects on economic growth of oil production, oil resources and oil revenues along with the quality of democratic institutions, investment and openness to trade.

Design/methodology/approach
A Durbin spatial model, a cross-sectional model and panel-data model are used.

Findings
First, the validity of the spatial Durbin model is vindicated. Second, consistently with the oil-curse hypothesis, oil production, resources, rent and revenues have a negative and generally significant effect on economic growth. This result is robust for across the panel data, spatial Durbin and spatial autoregressive models and for different measures of spatial proximity between countries. Third, the author finds that the extent to which the business environment is perceived as benign for investment has a positive and marginally effect on economic growth. Additionally, economic growth of a country is further stimulated by a spatial proximity of a neighbouring country if the neighbouring country has created strong institutions protecting investments. Fourth, openness to international trade has a positive and marginally significant effect on economic growth.

Originality/value
This paper examines theories and studies that have been done before. However, as the related literature on the growth–resource abundance nexus has rarely examined spatial effects, this study seeks to test jointly the spatial effect and the neighbouring effect on the oil curse hypothesis.

This work is devoted to one of the important tools of macroeconomic policy – the stabilization fund. This phenomenon is particularly relevant for natural resources reach countries, since inept spending of huge additional revenues from the export of natural resources may lead to unpredictable consequences, the negative effect of which would negate the positive impact of resource revenues.

The paper examines the main macroeconomic aspects of “resource curse” hypothesis. The paper also proposes the recommendations on economic strategy of the government for minimizing the negative effects of “resource curse”. One of these strategies is the creation of a special fund for the accumulation of "extra" money coming into budget from export of natural resources. Such funds in various resources-exporting countries are called differently . In Russia it's Stabilization Fund .

The special section of the paper is devoted to the Stabilization Fund of the Russian Federation, focuses on the causes of its formation, the basic strategy of accumulation , the basic functions and the expected development strategy and transformation for the future. The final section of the paper uses the model presented in the work of Da Costa and Olivo (2008) to analyze the presence of oil and fiscal dominance in the Russian economy as well as the relationship between monetary aggregates and inflation in 1999 – 2007.

A widely held belief before the 1990s – referred to as the oil-blessing hypothesis – was that oil discovery and production should promote economic growth and development, and lead to poverty reduction. However, the so-called ‘oil-curse’ hypothesis, postulated by Sachs and Warner in 1995, challenged this belief, thus provoking a heated debate on the theme. The oil-curse hypothesis has been traditionally tested by means of cross-sectional and panel-data models. We go beyond these traditional methods to test whether the presence of spatial effects can alter the hypothesis in oil-producing African countries. In particular, the effects on economic growth of oil production, oil resources and oil revenues along with the quality of democratic institutions, investment and openness to trade are investigated. Our findings are as follows. First, the validity of the spatial Durbin model is vindicated. Second, consistently with the oil-curse hypothesis, oil production, resources, rent and revenues have a negative and generally significant effect on economic growth. This result is robust for across the panel data, spatial durbin, and spatial autoregressive models, and for different measures of spatial proximity between countries. Third, we find that the extent to which the business environment is perceived as benign for investment has a positive and marginally effect on economic growth. Additionally, economic growth of a country is further stimulated by a spatial proximity of a neighbouring country, if the neighbouring country has created strong institutions protecting investments. Fourth, openness to international trade has a positive and marginally significant effect on economic growth. However, the significance of the parameter estimate is sensitive to the model that is being considered. Overall, the findings suggest that oil-producing African economies are cursed by oil discovery, production and revenues rather than by the spatial proximity with their neighboring countries.

This article examines how leading European newspapers reported on oil-sands production in Canada between 2008 and 2013. Based on content and critical discourse analysis of news reports published in major daily newspapers in the United Kingdom, germany, and France, it compares the interpretative frames and dominant storylines. the data analysis suggests that overall, European coverage adopted a critical perspective based on the environmental impacts of oil-sands development, with very particular differences in environmental frame building among the national media analyzed. the British coverage focused mainly on narratives based on a combination of factors such as cultural ties between the two countries and social and cultural practices of reporting on annual shareholders' meetings. in contrast, the later german and French environmental frame building was embedded mostly in the European debate over the Fuel Quality directive or in discussions of the Keystone Xl pipeline project. this article aims to provide a broader picture of how a prominent Canadian public policy issue is reflected in Europe and to contribute to the assessment of Stephen Harper's goal of fostering the international image of Canada as an energy superpower. the results of the empirical analysis suggest that Canada's position in the oil market did not allow it to actively lead the international energy discourse and instead fractured its ability to efficiently influence this aspect of its international image. as a result, oil-sands production had important destabilizing effects on Canada's international image in European media.

Is there a resource curse? Some scholars argue that resource income is associated with slower transitions to democracy; others contend that the negative effects of resources are conditional on factors such as institutional quality. To test these competing hypotheses, this article exploits the price spike caused by the 1973 oil embargo, which transformed several countries with latent oil industries into resource-reliant states. Our quasi-experimental research design allows for better identification of causation than the associational approaches common in the literature. We use the method of synthetic controls to compare the political development of states that received resource-derived revenue with how these states would have behaved in a counterfactual world without such revenue. We find that there is little evidence that a resource curse systematically prevents democratization or that institutional quality alone determines outcomes. Nevertheless, resource income meaningfully affect...

This paper examines the effects of OPEC membership on economic development. Using the theory of transaction cost economics (TCE), we show that OPEC satisfies the characteristics of a hybrid organisation under TCE. Thus, membership in OPEC should improve economic development by reducing transaction costs. We suggest that this effect is stronger in less developed countries because of information asymmetries among regulatory authorities and firms. We also posit that membership in OPEC can alleviate the resource curse of its members by reducing the price volatility of oil and increasing bargaining power. We use a historical dataset of oil reserves that allows us to consider the period before the creation of OPEC in the analysis and find that the benefits of oil reserve endowment are higher for OPEC countries. However, these benefits decrease at higher levels of economic development.

This study applies the quadratic hill climbing model, stepwise regression, and a dynamic generalized method of moments to investigate the relationship between oil rents and agriculture growth in Ghana. Agriculture, once considered the backbone of Ghana’s economy recorded a reduction of its contribution to GDP from 45% in 1992 to 22% in 2013 and a growth rate of 0.04 in 2015. The results from all models confirm an inverse relationship between oil rents and agriculture output. Further, availability of agriculture land is a major driver of agriculture output. Since oil resources are exhaustible and oil revenues are volatile, the study recommends a sustainable investment plan that emphasis on diversification, private investment in the agriculture value chain, and productive land use, and encourages higher percentage of revenues into agriculture.

Conventional explanations of resource curse or paradox of abundance correlate resource abundance and bad economic policies, underdevelopment, poverty and conflict. Such a conclusion, in the light of the presence, alongside “cursed states”, of successful resource abundant states has become debatable and has encouraged analysts to develop conditional explanations that emphasize the role of the political rather than economic factors in the mechanism of resource curse. This paper argues, using the Inter-governmental Fiscal Relations system in Nigeria as example, that while the policy choices of politicians determine how resource rents are utilized, it is “institutional quality”, the extent to which political institutions promote the use of rational and meritocratic criteria in allocating public sector resources and ensure accountability that matters, that is of crucial importance in determining whether resource abundance will lead to resource curse.