The Impact of Oil and Gas Revenues on Human Development

Abstract

Over recent decades, natural resources can be a curse or a blessing for oil and gas-rich countries, and has long been an overarching topic of research among academics and policymakers. The study aims to empirically verify the impact of oil and gas revenue on HDI, and examines how this impact is influenced by economic, political and environmental factors. For this purpose, three models have been used OLS, LSDV and GLS which the latter was the most appropriate to analyse penal data for eight resource-rich Arab countries over the period 2000-2019. The results indicate that oil and gas revenue have a negative impact on HDI, and the countries whose gas resource constitutes the largest proportion of their revenues compared to other Arab resource-rich countries were more vulnerable to Dutch Disease. The results also reveal that Arab resource-rich countries with insufficient institutional quality, lack control of corruption, negative inflation and positive relationship of CO2 have harmed human development. In addition, Libya scored better rates in HDI but with very small different percentages compared to other Arab resource-rich countries. Based on these results, the study suggests that improving government efficiency and institutional quality are an urgent move to best exploit oil and gas revenues and decrease reliance on natural resource rents to circumvent the occurrences of the resource curse in the future