Taxation of Oil Products and GDP Dynamics of Oil-Rich Countries

This article proposes a complementary explanation for why oil-rich economies have experienced a relative low GDP growth over the last decades: the proportion of taxes in the prices of petroleum products have been globally increasing in the last four decades, making oil revenues grow slower than output from manufacturing and yielding a low GDP growth for oil-exporting countries. This is illustrated in a two-country model of oil depletion which examines why a net oil-exporting country and a net oil-importing country are differently affected by increased taxes on resource use. The hypothesis is constructed on the theory of non-renewableresources taxation. The argument is based on the distributional effects of taxes on exhaustible resources, which are mainly borne by the suppliers. The theoretical predictions are not invalidated by available statistics.