Politická ekonomie X:X | DOI: 10.18267/j.polek.1498

Investigating the Impact of Oil Rents, Foreign Direct Investment, and Exports on Productive Capacity: Concentrating on Spatial Analysis for the Gulf Cooperation Council Countries

Orhan Cengiz ORCID..., Fatma İdil Baktemur ORCID...
Orhan Cengiz (corresponding author), Çukurova University, Pozanti Vocational School, Department of Accounting and Taxation, Pozanti, Turkey
Fatma İdil Baktemur, Osmaniye Korkut Ata University, FEES, Department of Econometrics, Turkey

Oil rents (OR) have a significant role for oil-abundant countries; therefore, most oil-abundant countries depend on oil sectors. However, if gains from OR are not invested in the productive sectors, it may adversely affect long-term sustainable growth. As discussed in the relevant literature in the scope of the resource curse hypothesis (RCH) or Dutch disease, depending on natural resources (NR) may crowd out productive investment, resulting in decelerating economic growth (EG). However, crucial policies emerge that suggest that OR contributes to or dampens productivity in oil-rich countries. As it is observed that not many studies consider the role of OR on productive capacity, which is crucial for sustainable economic development. Therefore, the current study attempts to research the impacts of OR on productive capacity for a panel sample of the Gulf Cooperation Council (GCC) countries from 2000 to 2021 by adopting spatial panel econometric techniques: the spatial autoregression (SAR) model, the spatial error model (SEM), and the spatial Durbin model (SDM).The empirical findings point out that despite OR having a negative impact on productive capacity in the GCC countries, there is no spatial effect on productive capacity. This result indicates that the change in OR in any member of the GCC does not spread to other members. Moreover, foreign direct investment (FDI) inward has positive local and spatial impacts on productive capacity. Although merchandise exports (EXP) have a positive spatial impact on productive capacity, there are no local effects. Finally, economic growth (EG) has negative local and spatial impacts on productive capacity. In line with empirical findings, some insightful policy implications can be offered that policymakers in the GCC countries should direct OR to productive investments to capture long-run sustainable development. Moreover, policymakers should encourage FDI in productive sectors.

Keywords: Oil rents, natural resources, economic growth, productive capacity, spatial econometrics, GCC countries

Received: October 26, 2024; Revised: February 5, 2025; Accepted: February 24, 2025; Prepublished online: September 15, 2025 

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