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Gorjizadeh, Sanaz (2009) An analysis of growth performance: the case of OPEC (1985-2005). Masters thesis, London Metropolitan University.
In recent years, a substantial body of economic research has been focused on studying the direct and indirect role of natural resources on economic performance. Several economists have presented various theoretical explanations to find a relationship between natural resources and the economic performance of the resource abundant countries. This literature, broadly under the heading of Dutch disease, is concerned with the negative effect of natural resource- the theory that countries rich in natural resources tend to perform badly and resource abundance lowers growth- has been assessed empirically and analysed in a number of recent studies. Yet, the question of what determines and how government policy affects growth in resource exporting economies remains to be studied in depth in many respects, which essentially requires a focus on the OPEC oil cartel. The controversial effect of natural resource boom on growth performance is the matter of concern in this paper. This paper reviews the relevant literature on economic growth including "old and new" growth models as well as the crucial role of institutions. Data and the study are centred on growth performance of OPEC (Organisation of the Petroleum Exporting Countries) since 1985. The main contribution to the literature will be: an empirical analysis based on OPEC data and reconstructing a new theoretical model based on Sachs and Warner model (1995) by combining variables from growth models plus variables of Dutch disease. While the oil producing countries have been omitted from Sachs and Warner's panel data, the model will be used to see if the result stays the same when it applies only to such oil abundant countries. Also the present thesis makes an effort to take into account the effects of oil price and the role of institutions in reducing or enhancing the growth performance by providing a critical examination of two examples of success and failure in reducing the oil dependency among OPEC countries based on descriptive data.
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