The Effect of Petroleum Reserves on Economic Growth in the Selected Countries from the Resource Curse viewpoint (With an Emphasis on Democracy)

In this paper, we investigate the effect of petroleum reserves on economic growth with emphasis on democracy using GMM method during 1960 -2012. We focus on three groups: (1) high-income countries (Australia, America, UK, Denmark, Norway and Canada), (2) middle-income countries (Colombia, Malaysia, Iran, Gabon, Ecuador and Algeria) and (3) low-income countries (Egypt, India, Indonesia and Syria). The dependent variable is GDP (in 2005 constant prices), and independent variables are oil reserves, the size of government, democracy, trade openness, and consumer price index. The results confirm the resource curse in the middle-income countries but reject it among the high-income and low-income countries.