Farshad Mo’meni; Farzaneh Samadian
Volume 13, Issue 50 , October 2013, , Pages 17-62
Abstract
This paper reviews the effects of institutions quality on the mechanisms that influence the turning of the blessing of oil resource revenues into a curse for Iranian economy and during 1973-2011. The main research question is that in a situation characterized by inefficient and malfunctioning institutions, ...
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This paper reviews the effects of institutions quality on the mechanisms that influence the turning of the blessing of oil resource revenues into a curse for Iranian economy and during 1973-2011. The main research question is that in a situation characterized by inefficient and malfunctioning institutions, the injection of oil revenue into the economy, how and through which channels, will cause resource curse to happen. This paper also shows that natural resources, like oil, don't lead to disasters per se; but this is the institutional-structural framework in a country and its interaction with the rents of oil revenues that can lead to the curse of natural resources. This study is a descriptive analysis and the analysis has been carried out by using Institutionalism Approach. According to the findings of this research, the negative effects of oil revenues in Iranian economy caused by inefficient and malfunctioning infrastructures and institutions, lead to short-run and long-run decrease in economic growth and resource curse finally. In Iran, oil revenue shows its immediate effect through fiscal policy and the government's budget (oil price effect on government expenditure) and then through budget deficit, it is related to the monetary sector of the economy (great impact of oil price on liquidity).So volatility of oil revenues and the rigidity of the government budget compared with the oil revenues is one of the main channels which the resource curse have been developed in Iran and caused to liquidity growth and inflation. It has important consequences such as increasing imports, decreasing non-oil export and increasing share of value added of services sector in GDP; the increase in the share of value added of services sector in GDP is such that the service sector (mainly brokerage and intermediary services) exceeds more than 50% of Iran's GDP.
Abbas Shakeri; Teymour Mohammadi; Hamid Nazeman; Javad Taherpoor
Volume 13, Issue 50 , October 2013, , Pages 63-86
Abstract
The issue of the impact of oil revenues on the economic performance of the countries that own these incomes is a significant part of the economic literature. One of the main reasons for the poor performance of resource-rich countries is the incidence of “Dutch Disease” in these countries. ...
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The issue of the impact of oil revenues on the economic performance of the countries that own these incomes is a significant part of the economic literature. One of the main reasons for the poor performance of resource-rich countries is the incidence of “Dutch Disease” in these countries. Considering this issue, after we review the literature on Dutch Disease, we first focus on the occurrence of Dutch Disease in Iranian economy and in the next stage, we study the effects of this problem on economic growth. To see if the problem of Dutch Disease has happened in Iranian economy or not, we have studied the production share of different tradable sectors (industry and agriculture) and non-tradable sectors (services and housing) and to study the effects of Dutch Disease on economic growth, we have used the growth models related to this research area and we have estimated these models by applying Ordinary Least Squares (OLS) method with Withe correction. The results of our study show that the Dutch Disease has happened in Iranian economy along with the increase in oil incomes, especially in 1970s and 2000s, and also the occurrence of Dutch Disease has had a negative effect on economic growth in Iranian economy.
