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Oil Discovery, Political Institutions and Economic Diversification
Author(s) -
Alsharif Nouf,
Bhattacharyya Sambit
Publication year - 2019
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/sjpe.12202
Subject(s) - diversification (marketing strategy) , volatility (finance) , petroleum , economics , politics , notice , panel data , oil price , monetary economics , international economics , business , financial economics , political science , econometrics , paleontology , marketing , law , biology
Diversification is touted as a desirable policy objective for oil‐rich nations because it reduces exposure to volatility. However, the empirical relationship between petroleum and diversification is not well understood. Here, we test the effect of giant oil discoveries on diversification using a panel dataset of 136 countries observed over the period from 1962 to 2012. We notice non‐oil sector export concentration 8 years after a discovery. However, we do not observe any effect on the structure of employment in non‐resource and manufacturing sectors. Democratic political institutions moderate the export and employment concentration effects of petroleum discovery.