Addressing the growth failure of the oil economies: The role of financial development |
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Authors: | Masoud Nili Mahdi Rastad |
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Affiliation: | aGraduate School of Management and Economics, Sharif University of Technology, Azadi St., P.O. Box 11365/8639, Tehran, Iran;bDepartment of Economics, University of Illinois, Urbana-Champaign, United States |
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Abstract: | The oil exporting countries have experienced a relatively continuous fall in GDP per capita over the last 30 years. This is in spite of benefiting from a more than average of the rest of the world investment rate. The findings of this paper, report a lower level of financial development for the oil economies when compared with the rest of the world. We will show in this paper that the higher rate of investment of the oil economies can be explained mainly by the oil revenues and surprisingly, financial development has a net dampening effect on investment for these economies. The paper also shows that the weakness of financial institutions, contributes to the poor performance of economic growth of the oil economies and the weakness of financial institutions might be associated with the dominant role of government in total investment and the weakness of private sector. |
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Keywords: | Oil and non-oil exporting countries Economic growth Investment inefficiency Financial development |
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