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JES
44,4
540
Received 17 January 2016
Revised 30 June 2016
2 November 2016
3 November 2016
Accepted 12 November 2016
Journal of Economic Studies
Vol. 44 No. 4, 2017
pp. 540-551
© Emerald Publishing Limited
0144-3585
DOI 10.1108/JES-01-2016-0015
Oil exports and non-oil exports
Dutch disease effects in the Organization of
Petroleum Exporting Countries (OPEC)
Huseyin Karamelikli
Department of Economics, Karabük University, Safranbolu, Turkey
Guray Akalin
Department of Economics, Faculty of Economics and Administrative Sciences,
Dumlupinar University, Kutahya, Turkey, and
Unal Arslan
Department of Economics, Mustafa Kemal University, Antakya, Turkey
Abstract
Purpose – The purpose of this paper is to examine the dynamic relationship between oil exports, non-oil
exports, imports and economic growth in the Organization of Petroleum Exporting Countries (OPEC),
covering the period 1972-2013 by using panel data analysis.
Design/methodology/approach – The results from the dynamic panel data methods are as follows: there
exists the cross-sectional dependence on each variable. According to the cross-sectionally augmented panel
unit root tests, all variables are stationary at the first difference. Westerlund and Edgerton (2007) LM
Bootstrap cointegration test shows that there is a long-term relationship between variables.
Findings – The results obtained by the Common Correlated Effects (CCE) estimator indicate that the
increase in oil exports has a positive impact on the GDP of all countries, while the increase in oil exports has a
negative impact on the non-oil exports of some countries.
Originality/value – In this study, the relationship between oil exports, economic growth, imports and
non-oil exports of the 12 OPEC member countries is tested by considering the cross-sectional dependence
between 1972 and 2013. In the study, the authors found a positive relationship as a result of researching the
impact of oil exports on economic growth in the frame of CCE panel estimations results.
Keywords Economic growth, Panel data analysis, Export, OPEC
Paper type Research paper
1. Introduction
The relationship between natural resources and economic growth has been studied
extensively in economic literature. The general perception on the relationship between
natural resources and economic growth indicates that a country with rich natural resources
would grow faster as compared to others. Also, the assertion that sustainable economic
growth would only be possible with natural resources’ continuity. This also finds broad
support. Is resource abundance necessary for economic growth? Are countries with natural
resources able to grow faster in comparison to others which do not have similar or identical
resources? Could growth differences between countries be explained on the basis of the
natural resources which these countries have?
Contrary to the general belief that says natural resources do not always have a positive
effect on an economy. In particular, a phenomenon called “Curse of sources” had arisen in
the 1960s when natural gas reserves were discovered in the Netherlands. This phenomenon
is termed as “Dutch Disease.” It poses a serious threat to economies and it could have
potential destructive impacts on an economy. Therefore, it requires further study. It can
be determined that there is a broad theoretical and empirical literature supporting the
hypothesis that natural resource-rich economies cannot grow faster than others.
JEL Classification — Q43, Q34, C23
Being resource-rich country may even expose damage to these economies. If one focuses on Oil exports and
Organization of Petroleum Exporting Countries (OPEC) members in particular, excessive non-oil exports
foreign exchange inflow to the domestic market can cause an overvaluation of national
currencies. Because of an overvalued national currency, domestic commodities would be
more expensive when compared to foreign sourced products. Therefore, domestic producers
might lose their competitiveness in global markets. In this perspective, oil exports should
reduce non-oil exports together with domestic production. In this context, it is attempted to 541
discover the relationship between economic growth and oil exports in a theoretical and
empirical framework in the first part of this paper. Then, it is tried to determine the effects of
oil exports on non-oil exports and economic growth by using panel cointegration method.
Eventually, in the final part of the paper, there are comments on the results of this research.

2. Literature review
The natural resource-rich countries could earn considerable volume of revenues in terms of
foreign currencies due to natural resource exports. These export oriented revenues could
have adverse effects on the economy. Especially when the Dutch disease occurs, i.e. when
exports related to natural resources may generate an overvaluation of the domestic
currency. Then, this phenomenon would lead to a significant negative impact on the non-oil
related exports of these countries. A description of Dutch disease was traced back as early
as the flowing of American treasures to Spain and its effects on Spanish economy by
Forsyth and Nicholas (1983). The main problem in this issue is why prosperous countries
with abundant natural resources grow more slowly relative to countries with scarce
resources in the twentieth century (Bulmer-Thomas, 1994; Sachs and Warner, 1995).
According to van der Ploeg (2011), the abundance of natural resources causes an overvalued
real exchange rate and leads to an inability to industrialize, also with leading to low
GDP growth rates. Large amounts of foreign exchange inflows into a country due to the
increase in foreign prices or quantity of certain underground sources might result in an
overvaluation of the domestic currency. Therefore, imported products would be cheaper
while exported products become expensive. That makes international competition difficult
for export-oriented companies (Feltenstein, 1992). The income acquired from the foreign
sales of resources reduce exports which are subject to internationally tradable products, so
the resources which are used in such industries flow into the production of non-tradable
goods. This may lead to the deterioration of the balance between sectors and an increasing
dependency of the economy to oil revenues (Corden, 1982; Corden and Neary, 1982).
These adverse effects of the Dutch disease could be more profound in countries that have
fragile economies, a bad institutional structure, corruption, an underdeveloped financial
system and institutional deficiencies with respect to the rule of law. Davis (1995) notes that
the countries which have economic activities depending on rich natural resources are in a
sound situation and the impact of natural resources in the emergence of this situation is
notable. Yet, the role of the institutional structure should not be neglected. According to
Davis (1995), countries mainly exporting natural resources have good economic
performance, are more democratic and have a suitable political ground for attraction of
foreign investment when compared to other developing countries. On the other hand,
countries with rich natural resources but poor in terms of institutional structure exhibit a
weak economic performance. It could even be said that the revenue acquired from oil and
other minerals could lead to harmful effects, especially on institutions.
Corruption and mismanagement could amount alongside with increased income and reduce
the general level of production in the long term as a result of the weakening of institutions
(Boyce and Herbert Emery, 2011; Gylfason, 2001; Sachs and Warner, 1995; Sala-i-Martin and
Subramanian, 2003). However, according to Mehlum et al. (2006), the status of the institutions in
this case leads to different results in different countries. Alexeev and Conrad (2009) used
JES the Russian, Ukraine and Belarus as instances which have similar institutional structure and
44,4 found that natural resources for some countries can have a negative impact on the institutional
structure; but, it cannot be the universal situation for all countries. As maintained by
Gylfason (2001) the public and the private sector in countries with wide natural resources have
not paid enough attention to develop human capital. Therefore, according to Hausmann and
Rigobon (2003), this situation has led to a low growth performance.
542 Revenue acquired from natural sources, particularly oil revenues might lead a society to
a less productive position. Entrepreneurs regard such circumstances as an opportunity for
wealth creation. Non-productive but profitable businesses may consider this situation as an
occasion which may be easier than manufacturing it. This situation not only weakens
productive areas of an economy, but also could increase corruption and conflicts. Moreover,
in oil exporting countries, fiscal policy is mainly based on oil exports. So, there is a very
small share for taxes. Therefore, the increase in oil prices brings about an increase in current
public spending in such countries (El Anshasy and Bradley, 2012).
There are some empirical studies about the relationship between Dutch disease and
economic performance for different periods and different groups of countries. In some
empirical research works, which explore the negative impacts of the exchange of natural
resources impacted on the economy negatively. So, it was called curse of resources or
Dutch disease. Also, some researches indicated that there is a positive effect for the
aforementioned relationship. Wantchekon and Nathan (1999) had investigated the effect of
natural resource dependency and wealth creation in democratic countries with respect to
economic growth. According to the results of the study of Wantchekon and Nathan (1999),
in countries which lacks an institutionalized government and budget transparency, oil
revenues lead to authoritarianism and a breakdown in political and social stability. In this
study, the Gini coefficient, the ratio of oil exports to GDP and concentration measurements
of government are used. Gylfason and Zoega (2001) have examined the impact of natural
resource abundance on the economic growth using panel data analysis for 85 countries in
the period of 1965-1998 and it was concluded that resource abundance have a negative effect
on economic growth. Neumayer (2004) delineated a curse of resources hypothesis for five
oil-exporting countries. Neumayer’s findings appear to support this hypothesis. Moradi
(2009) used time series data for analyzing the case of Iran for the period 1968-2005.
The impact of abundance of oil reserves on economic growth and income distribution was
investigated in his research. Moradi obtained the result that in the long term, oil exports
have only a small positive effect on economic growth, but have serious and negative impact
on income distribution. Egert and Leonard (2008) studied the existence of Dutch disease in
Kazakhstan for the period 1996-2005. The researchers focused on the effects of increases in
oil prices and oil exports on non-oil dependent sectors and the exchange rate. According to
Egert and Leonard, the non-oil sectors were adversely affected by the increase in oil prices
and exports. Olomola (2007) by using panel regression analysis for 60 countries consisting
of 47 non-oil exporters and 13 oil exporters with data ranging from 1970-2000, investigated
the effect of oil wealth on economic growth and exports. The main result of the study of
Olomol determines that oil revenue adversely affects both exports and economic growth.
Saher (2011) examined the relationship between oil prices and exports, economic growth and
export revenues for Pakistan and India during the period of 1971-2009. His findings
demonstrated that there was a long-term cointegration among the three variables.
Ghalayini (2011) investigated the relationship between oil exports and economic growth
for G7, OPEC, China, India and Russia but did not get a clear result. Egert (2012) researched
on the existence of the relationship between economic growth and oil exports in Central and
South West Asian countries for the period of 1996-2006. According to this study, a long-term
positive relationship between economic growth and oil exports had been identified.
Mohammadi et al. (2014) classified oil-rich countries into two parts with regard to strengths
and weaknesses of democracy, by using data covering the period of 1995-2010 by utilizing Oil exports and
panel data analysis method. This study determined that countries with strong democracy non-oil exports
benefited from the increase in oil revenues whereas in countries with poor democracy, there
is an adverse effect of oil revenue generation on growth. Apergis et al. investigated the effect
of oil rents on agriculture value added in oil producing Middle East and North African
(MENA) countries by using data covering the period of 1970-2011 and by using panel data
analysis method. Apergis et al. obtained a negative relationship between oil revenues and 543
agriculture value added in the long run. And this result serves as an evidence of a
Dutch disease effect of an oil sector boom on agriculture in the MENA countries.

3. Model and data

In this study, the relationship between oil exports (expre), non-oil exports (exp), imports
(İmp) and economic growth (Gdp) is tested by using OPEC’s annually published Annual
Statistical Bulletin data ranging from the year of 1972-2013. The data which is used to test
the hypothesis in this study was sourced from the OECD Economic Outlook database.
Because of the lack of availability of long-term data, only 12 OPEC countries were included
in the analysis. Gauss10 Eviess8 software was used in the analyses and models to be
estimated are as follows:
Model 1:
Gdp ¼ a1i þa2i Expre þuit (1)
Model 2:
Exp ¼ b1i þb2i Expre þuit (2)
Model 3:
İmp ¼ d1i þd2i Expre þuit (3)

3.1 Panel unit root analysis

For implementation of panel cointegration analysis variables must be tested to check
whether they are stationary. When the panel data analysis covers a long period of time, unit
root case may lead to time series and consequently, the spurious regression problem could
occur in panel analysis (Granger and Newbold, 1974). Stationary means there is
differentiation in average, variance and covariance of the time series over time. If the
variables are stationary and this is considered as a problem, variance of non-stationary
time series, resulting from the numerous number of observations goes to infinity. Therefore,
the conventional test methods cannot be used to examine economic relations. Panel unit root
tests are divided into two generations, first generation does not take into account the
cross-sectional dependence whether second generation tests take that into account.
Furthermore, before deciding which unit root tests would be used, one needs to test the
cross-sectional dependence existence.

3.2 Testing the cross-sectional dependency

It is typically assumed that the disorders in panel data models are cross-sectionally
independent. This is particularly true of panels with a large cross section dimension (N).
In the case of panels where N is small ( for instance 10 or less) and the time dimension of
the panel (T ) is sufficiently large, the cross correlation of the errors can be modeled
(Pesaran, 2004). Ignoring error cross-sectional dependence can have serious consequences
and the presence of some form of cross-sectional correlation of errors in panel data
applications in economics is likely to be the rule rather than the exception. Cross correlations
JES errors could stem from omitted common effects, spatial effects, or could arise as a result of
44,4 interactions within socioeconomic networks (Chudik and Pesaran, 2013).
As mentioned above, it is necessary to test the cross-sectional dependence of variables
and cointegration models. For this purpose, cross-sectional dependence of variables and
cointegration models shall be tested with Pesaran (2004) CDLM test, Breusch-Pagan (1980)
CDLM1 test, Pesaran (2004) CDLM2 and Bias-adjusted CD test. The results of the tests are
544 given in Table I.
H0 hypothesis claims that there is no cross-sectional dependence and is rejected by all the
tests for all variables and cointegration models which is summarized in Table I. Because of
cross-sectional dependence existence in all of the variables and models, second-generation
unit root tests must be used. Therefore, in this study, the extended cross-sectional
dependence ADF Cross sectionally augmented Dickey Fuller (CADF) panel unit root test
that developed by Pesaran (2006) was used.
The most important feature of this test is that it provides reliable results when NWT or
TW N. Also, this test is heterogeneous and gives separately results for each cross
section (Pesaran, 2007). The panel unit root test of CADF entails estimating the following
panel model:


yit ¼ 1fi mi þfi yi;t1 þuit i ¼ 1; :::; N; t ¼ 1; :::; T (4)

The test statistic

P is obtained for each section. The entire panel of test statistics is calculated
as CIPS ¼ Ni¼1 CADFif =N (Pesaran, 2007). Results for CIPS statistics are in Table II.
According to the cross-sectionally augmented (CIPS) panel unit root tests,
all series have a unit root while the test statistics for the first differences strongly
reject the null hypotheses, which imply that the variables are stationary in the
first-difference state. Because of integration of all series with same order, long-term
relationship could be tested by cointegration analysis. If one wants to obtain reliable
results from the cointegration analysis, the cross-sectional dependence should be taken
into account in the co-integration analysis.

3.3 Panel cointegration analysis

The unit root test results represent that the integrated degree of the variables as one and
this situation indicates a possible long-run cointegrating relationship among the variables.
Therefore, cointegration test shall be performed at next stage; because, there exists cross
dependency in variables and the employed cointegration test must take into account the
cross-sectional dependence. In order to analyze the existence of the long-run equilibrium
relationship among the variables in question, the panel cointegration tests developed by
Westerlund and Edgerton (2007) was conducted. The difference of this cointegration test

CD LM1 CD LM2 CD LM
(BREUSCH, (PESARAN 2004 (PESARAN Bias-adjusted CD test
PAGAN 1980) CDLM) 2004 CD) (PESARAN-ULLAH 2007)

Exp 125.143 (0.000) 5.148 (0.000) −0.615 (0.269) 24.876 (0.000)

İmp 100.145 (0.000) 5.813 (0.000) −3.953 (0.000) 35.487 (0.000)
Expre 105.569 (0.000) 6.394 (0.000) −3.070 (0.001) 42.264 (0.000)
Gdp 188.706 (0.000) 10.687 (0.000) −1.387 (0.083) 36.831 (0.000)
Table I.
Cross-section MODEL 1 647.701 (0.000) 50.631 (0.000) 21.878 (0.000) 52.484 (0.000)
dependence test MODEL 2 309.969 (0.000) 21.235 (0.000) 7.433 (0.000) 22.507 (0.000)
results for variables MODEL 3 499.920 (0.000) 37.768 (0.000) 18.914 (0.001) 33.646 (0.000)
and models Note: The number of model lags (π) is taken as 1 and probability values are shown in parentheses
 Exp İmp Expre Gdp
Oil exports and
non-oil exports
Model contains only intercept
Level −1.49 −2.652 −2.126 −2.530
1st Differences −3.511 −4.278 −3.212 −3.665
Model contains constant and trend
Level −2.685 −2.872 −2.545 −3.275 545
1st Differences −4.174 −4.452 −3.095 −3.526
Notes: The maximum lag length taken as 4 and optimal lag lengths is determined by the Schwarz Table II.
information criteria. CIPS statistics critical value for intercept model is −2.55 (1 percent) (Pesaran, 2007, CIPS panel unit
Table I(b), p: 280) ; for models by intercept and trend −3,06 (1 percent) (Pesaran, 2007, Table I(c), p: 281) root test results

with respect to implement autocorrelation and variable variances in the cointegration

equation and to take the cross-section dependency into account. This is the test in which the
LM bootstrap process used, and the hypothesis formed as: H 0: Q21 ¼ 0, this means that there
is cointegration among all series, when the hypothesis is: H 1: Q21 40, then there is no
cointegration among all series. Hypotheses of this test are considerably strict.
The cointegration equation is: yit ¼ ai þx0it bi þzit
X t
zit ¼ uit þ nij
j¼1

nij average of it is zero or variance of it which y2İ ¼ l0 is an error term. However, the used
P P
LM tests statistics LM Nþ ¼ 1=NT 2 Ni¼1 Tt¼1 W 2 s2 it are calculated in this way.
The incurred analyses were given in the Table III.
The results show that there is a long-run relationship between the variables for three models.
This means that there exists a long-term relationship among the non-stationary variables.

3.4 The long-run coefficients

Once the cointegration relationship is established, the next step is to estimate the long-run
parameters. In order to estimate panel cointegration parameters, various methods have been
proposed, namely panel OLS, panel dynamic OLS, and panel fully modified OLS. However,
none of them takes cross-sectional dependence into account. To involve cross-sectional
dependence, the Common Correlated Effects (CCE) estimator developed by Pesaran (2006)
was utilized. CCE estimators have satisfactory small sample properties even under a
substantial degree of heterogeneity and dynamics as well as for relatively small values of
N and T. This model estimator involves the effects of factors not included in the econometric
model coupled with a cross-section of each unit time vector regression equations. The CCE
method is based on the following linear heterogeneous panel data model:

yit ¼ a0i dt þb0i xit þ eit (5)

Panel cointegration test results

Model 1 Model 2 Model 3
Table III.
LM Stat 4.176 (0.279) 3.802 (0.112) 1.865 (0,100) Westerlund and
Notes: Asymptotic probability values were gained from standard normal distribution. The Bootstrap Edgerton (2007)
probability values were gained from distribution of 5.000 repetitions. LM bootstrap
JES where dt is a n × 1 vector of determined common effects (including deterministic such as
44,4 intercepts or seasonal dummies), xit a k × 1 vector of observed individual-specific regressors
with respect to cross-section unit at time t, and the errors have the multifactor structure:

eit ¼ g0i f t þ eit (6)

in which ft is the m × 1 vector of unobserved common effects and εit are the individual-
546 specific (idiosyncratic) errors assumed to be independently distributed of (dt, xit).
The CCE estimator is supposed to indicate that the effects of unobserved common effects
and independent variables which are stationary and external. Yet, the CCE approach
continues to yield consistent estimation and valid inference even when common factors are
unit root processes (I(1)) (Pesaran, 2006). CCE also allows for individual specific errors to be
serially correlated and heteroscedastic. In the model, Common Correlated Effects Pooled
statistics are used for panel and is calculated as follows:
!1
X
N X
N
b^ p ¼ yi X 0i M w X i yi X 0i M w yi (7)
i¼1 i¼1

Finally, the results from the CCEs method are presented in Table IV.
According to the coefficients obtained for the panel there is a positive relationship
between economic growth and oil exports, non-oil exports and oil exports, import and oil
exports. Also, the coefficients obtained are statistically significant. Due to differences in the
structure of the national economy, the long-term coefficient would be beneficial to obtain
country-based results. First, the impact of oil exports on economic growth was analyzed
based on country results which are presented in Table V.
When the results were analyzed with respect to each country, coefficients obtained
for all the countries are positive and statistically significant, except for Nigeria and
Ecuador. Due to the statistics of oil revenues as percentage of GDP which was published
by World Bank, Nigeria and Ecuador have the lowest ratio among OPEC countries.
Therefore, the share of oil revenues in GDP for Nigeria and Ecuador is low and its
effect on economic growth is limited. Otaha (2012) and Elosegui and Grosman (2014) found
similar results for Nigeria and Ecuador respectively. After that, long run effects of oil
exports on non-oil exports were analyzed regarding to each country and the results
are presented in Table VI.
When the results of the panel are analyzed, it is evident that an increase in oil exports has
a positive impact on non-oil exports. However, this interaction on the basis of country
presents different results. The coefficients obtained from the study are positive and
statistically significant for Algeria, Libya, Qatar, Saudi Arabia and Venezuela, while
coefficients of Iran, Iraq and Nigeria are negative and statistically insignificant.
The important point in this case is the exchange rate regimes of these countries. Iran, Iraq
and Nigeria have stabilized exchange rate regime which means that any decrease in oil export

CCE results
Model Dependent variable Independent variable Coefficients t-stat.(NW)

Model 1 Gdp Expre 2.032 5.731

Model 2 Exp Expre 0.101 2.911
Table IV. Model 3 Imp Expre 0.287 4.895
The CCE results Notes: Autocorrelation and heteroscedasticity problems in the estimate were corrected with the Newey-West
for the panel method. The critical value is −1.65 +1.65 at the 5 percent level
 Coefficients t-stat.(NW)
Oil exports and
non-oil exports
Algeria 1.826 3.86
Angola 1.369 5.08
Ecuador 0.655 0.37
Iran 3.198 3.48
Iraq 2.472 12.74
Kuwait 0.539 2.35 547
Libya 1.175 13.5
Nigeria 3.429 1.07
Qatar 3.059 4.88
Saudi Arabia 1.273 4.35
United Arab Emirates 3.936 2.72 Table V.
Venezuela 3.770 2.56 The impact of
Notes: Autocorrelation and heteroscedasticity problems in the estimate were corrected with the Newey-West oil exports on
method. The critical value is (−, +) 1.65 at the 5 percent level economic growth

Coefficients t-stat.(NW)

Algeria 0.688 7.31

Angola 0.016 0.66
Ecuador −0.211 −0.81
Iran −0.152 −1.85
Iraq −0.038 −2.10
Kuwait −0.018 −0.60
Libya 0.028 3.50
Nigeria −0.278 −1.70
Qatar 0.914 3.82
Saudi Arabia 0.093 2.90
United Arab Emirates −0.378 0.67 Table VI.
Venezuela 0.527 5.85 The impact of
Notes: Autocorrelation and heteroscedasticity problems in the estimate were corrected with the Newey-West oil exports on
method. The critical value is (−, +) 1.65 at the 5 percent level non-oil exports

revenues would cause an increase non-oil product exports and vice versa. In other words,
fixed exchange rate regime would substitute non-oil export revenues with oil export revenues
when oil revenues diminished. The coefficients obtained for Ecuador, Kuwait, United Arab
Emirates are negative and statistically insignificant. Also, coefficients on Angola are positive
but statistically insignificant.
Finally, the long-run effects of oil exports on imports were analyzed on the basis of
country and the results are presented in Table VII.
In Angola, Iran, Iraq, Libya, Saudi Arabia, United Arab Emirates and Venezuela oil
exports have positive effects on imports and the coefficients obtained are statistically
significant. For, Qatar, oil exports have negative effects on imports and obtained
coefficients are statistically significant. Qatar has positive balance of payments and the
ratio of trade balance surplus to GDP is the highest rate among OPEC countries.
Therefore, Government of Qatar could target domestic investment to facilitate the
importation of machinery and technology even when the oil revenues are in decline.
Also, the results obtained for the long-run coefficients for Algeria, Ecuador, Kuwait and
Nigeria are statistically insignificant.
JES Coefficients t-stat.(NW)
44,4
Algeria 0.172 1.17
Angola 0.173 2.83
Ecuador 0.795 1.54
Iran 0.529 4.16
Iraq 0.305 2.40
548 Kuwait −0.079 −1.01
Libya 0.197 2.52
Nigeria −0.164 −0.15
Qatar −0.326 −2.29
Saudi Arabia 0.256 3.32
United Arab Emirates 1.122 2.12
Table VII. Venezuela 0.699 3.00
The impact of oil Notes: Autocorrelation and heteroscedasticity problems in the estimate were corrected with the Newey-West
exports on imports method. The critical value is (−, +) 1.65 at the 5 percent level

4. Conclusion
In this study, the relationship among oil exports, economic growth, imports and non-oil
exports of the 12 OPEC member countries is tested by considering the cross-sectional
dependence between the periods 1972 and 2013. In this study a positive relationship was
estimated as a result of researching the impact of oil exports on economic growth in the
frame of CCE panel estimations results. This indicated that the oil-exporting countries are
not completely exposed to the effects of Dutch disease. Aggregate demand increases
because oil exports caused increasing income levels for the exporting countries.
Furthermore, increase in demand is fulfilled resting on imports and the operations in the
domestic market. Therefore, it could be alleged that the increase in oil exports could not
cause a negative impact on the economy and the “Dutch disease” is not apparent for these
countries. Yet, this condition could change when one examines the country-based impact
of oil exports on non-oil exports. When the results compared, the relationship between
non-oil exports and oil exports is positive for Algeria, Libya, Qatar, Saudi Arabia and
Venezuela as well as negative in Iran, Iraq and Nigeria. Though Nigeria has abundant oil
and gas reserves, it had a political instability in the period studied. Military intervention,
which started in the 1970s, was one of the main reasons for this period of political
instability. On the other hand, Nigeria has various religious and ethnic groups
and this caused social discriminations and ethnic conflicts. So, one could claim that
Nigeria does not have a strong social and political institutional structure. It is thought that
under this social and political environment in Nigeria, revenue seeking is widespread.
Furthermore, revenues based on oil exports are allocated wrongly or allocated
to unproductive areas in Nigeria. So this could negatively affect economic growth.
On the other hand, it could be explained that the relationship between oil exports and
non-oil exports was negative due to embargo on Iran and Iraq, long-term wars in these
countries, the utilization of oil exports revenues for current government expenditures of
the state, lack of investment on human capital and finally, underutilized production
capacity in the related countries.
In OPEC member countries, there was a positive relationship between oil exports
and imports, which was expected as long as the income level would increase in these
countries. An increase in consumption of the public, individuals and households and
demand in technology and semi-finished goods of firms increase and these
stimulate imports. Thus, according to the results of panel cointegration coefficients, it had
affected imports positively in Angola, Iran, Iraq, Libya, Saudi Arabia, United Arab Emirates
and Venezuela. But, the same was not valid for Qatar. The main reason for Qatar in this Oil exports and
situation is that the ratio of imports to exports (including oil exports) is too low in non-oil exports
comparison with respect to the OPEC members. Since the imports are lower than exports,
in Qatar’s economy, oil exports revenues could not be canalized to imports. In this research,
it is observed that the “Dutch disease” is not valid in all OPEC members but valid in some
countries. Foreign exchange earnings of OPEC member countries could help growth for
non-tradable goods while it has the opposite effect for competitive market goods. If the oil 549
export revenues were used to support the exports and prepare the infrastructure to exports,
this subject would be invalid.
In this research, for instance, especially in Nigeria, Iran and Iraq, for example, it was seen
how important the institutional structure is in an economy. In this context, in the long term,
one could state that using oil revenues for human capital investments and for strengthening
the institutional structure, there could be a positive effect on the economy. OPEC member
countries should differentiate the oil export revenues from traditional government revenues.
Therefore, the budget dependency on oil revenues could be decreased. Using oil revenues
only for infrastructures, especially on human capital would cause increases on domestic
productivity as well.
It is also evident in the study that the impact of oil exports on economic growth is
positive for all countries, but there are some differences when one realizes the impact of oil
exports on non-oil exports. The crowding-out effect was determined for oil export on non-oil
exports in some countries. The government in these countries should keep non-oil exports to
encourage motivation for a long period of time even if the oil revenues are abundant.

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Corresponding author
Huseyin Karamelikli can be contacted at: hakperest@gmail.com

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