Unraveling the Nexus: Oil Shocks and Sustainable Development in OPEC Countries

Rasoulinezhad, Ehsan; Rezaeian, Masoud

doi:10.22050/pbr.2023.352842.1272

Unraveling the Nexus: Oil Shocks and Sustainable Development in OPEC Countries

Document Type : Original Article

Authors

Ehsan Rasoulinezhad ¹

Masoud Rezaeian ²

¹ University of Tehran

² Faculty of economics, University of Tehran, Tehran, Iran

https://doi.org/10.22050/pbr.2023.352842.1272

Abstract

The oil price fluctuations are a debatable issue among scholars. Understanding the appropriate utilization of underground resources is paramount, considering their abundance and historical significance as a crucial source of financial income for Iran. However, oil shocks pose challenges to petroleum exporting nations due to fluctuating oil prices and their reliance on the global economy. This study employs Econometrics models and auto-regression analysis to investigate whether oil shocks significantly affect sustainable development in OPEC countries during 2000-2019. Findings reveal a 'resource curse' affecting the analyzed nations, with rising oil prices having no substantial impact on their gross domestic product. Furthermore, increased oil revenues drive inflation, impeding urbanization and exacerbating inequality (Gini coefficient), indicative of the 'Dutch disease phenomenon. In conclusion, policymakers should prioritize the economy's size and reduce investment risks by formulating attainable long-term plans concentrated on sustainable development indicators, aiming for more stable progress. Oil shocks notably influence the sustainable development of petroleum-exporting countries.

Keywords

Sustainable development

oil shock

resources curse

Dutch disease

VAR model

Subjects

Oil and Gas Economics and Management

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