An important economic paradox in the economic literature is that countries with abundant natural resources are poor in terms of real gross domestic product per capita. This paradox, known as the ‘resource curse’, is contrary to the conventional intuition that natural resources help to improve economic growth and prosperity. Using panel data for 95 countries, this study revisits the resource curse paradox in terms of oil resources abundance for the period 1980–2017. In addition, the study examines the role of trade openness in influencing the relationship between oil abundance and economic growth. The study finds trade openness is a possible avenue to reduce the resource curse, in our sample, trade openness reduces oil curse by around 25%. Trade openness allows countries to obtain competitive prices for their resources in the international market and access advanced technologies to extract resources more efficiently. Therefore, natural resource–rich economies can reduce the resource curse by increasing exposure to international trade.

Item Type:	Refereed Article
Keywords:	oil rents, real GDP per capita, trade openness, dynamic panel data model, oil curse
Research Division:	Economics
Research Group:	Applied economics
Research Field:	Agricultural economics
Objective Division:	Economic Framework
Objective Group:	Measurement standards and calibration services
Objective Field:	Agricultural and environmental standards and calibrations
UTAS Author:	Majumder, MK (Mr Monoj Majumder)
UTAS Author:	Raghavan, M (Dr Mala Raghavan)
UTAS Author:	Vespignani, J (Associate Professor Joaquin Vespignani)
ID Code:	140984
Year Published:	2020
Web of Science® Times Cited:	13
Deposited By:	Economics and Finance
Deposited On:	2020-09-17
Last Modified:	2020-10-22
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