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Dutch Disease Effect of Oil Rents on Agriculture Value Added in MENA Countries

Author

Listed:
  • Nicholas Apergis

    (Department of Banking and Financial Management, University of Piraeus, Greece)

  • Ghassen El Montasser

    (École Supérieure de Commerce de Tunis, Université de la Manouba)

  • Emmanuel Owusu-Sekyere

    (Department of Economics, University of Pretoria)

  • Ahdi N. Ajmi

    (College of Science and Humanities in Slayel, Salman bin Abdulaziz University, Kingdom of Saudi Arabia)

  • Rangan Gupta

    (Department of Economics, University of Pretoria)

Abstract

This paper investigates the effect of oil rents on agriculture value added in oil producing Middle Eastern and North African (MENA) countries. Annual data from 1970 to 2011, panel cointegration tests by Pedroni (1999), long ran panel causality tests by Canning and Pedroni (2008), and two-step System GMM by Blundell and Bond (1998) are used in this study. We find a negative relationship between oil rents and agriculture value added in the long run, with a rather slow rate of short run adjustment of agriculture value added back to equilibrium after a boom in oil rents. These results indicate that an oil sector boom is associated with a contraction in the agriculture sectors of the countries in the panel in the long run. This is probably attributable to a resource movement effect from other economic sectors to the booming oil sector in these countries. This serves as evidence of a Dutch disease effect of an oil sector boom on agriculture in the MENA countries in this study.

Suggested Citation

  • Nicholas Apergis & Ghassen El Montasser & Emmanuel Owusu-Sekyere & Ahdi N. Ajmi & Rangan Gupta, 2014. "Dutch Disease Effect of Oil Rents on Agriculture Value Added in MENA Countries," Working Papers 201408, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201408
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    References listed on IDEAS

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    More about this item

    Keywords

    Dutch disease; oil rents; agriculture value added; Middle East and North African countries;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • N55 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Asia including Middle East
    • N57 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Africa; Oceania
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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