Q33 - Resource BoomsReturn

Oil rents play a significant role for oil-abundant countries; therefore, most oil-abundant countries depend on oil sectors. However, if gains from oil rents are not invested in productive sectors, it may adversely affect long-term sustainable growth. As discussed in the relevant literature in the scope of the resource curse hypothesis or Dutch disease, dependence on natural resources may crowd out productive investment, resulting in decelerating economic growth (GDP). However, crucial policies emerge that suggest that oil rents contribute to or dampen productivity in oil-rich countries. It is observed that few studies have considered the role of oil rents in productive capacity, which is crucial for sustainable economic development. Therefore, the study attempts to research investigate the impacts of oil rents in productive capacity for a panel sample of the 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 oil rents having a negative impact on productive capacity in the GCC countries, there is no spatial effect on productive capacity. This result indicates that change in oil rents in any member of the GCC does not spread to other members. Moreover, inward foreign direct investment has positive local and spatial impacts on productive capacity. Although merchandise exports have a positive spatial impact on productive capacity, there are no local effects. Finally, economic growth has negative local and spatial impacts on productive capacity. In line with empirical findings, some policy insights can be offered, namely that policymakers in the GCC countries should direct oil rents to productive investments to capture long-run sustainable development. Moreover, policymakers should encourage foreign direct investment in productive sectors.

Governments worldwide are grappling with the challenges of climate change. Following COP28 - the Dubai consensus - it has become even clearer that achieving CO₂ emission reduction targets is crucial to prevent the global temperature from rising above 1. 5 °C. In this context, our study assesses these ambitious climate goals through the lens of green energy and technology adoption within the E7 countries. Using quantile regression and panel ordinary least squares (POLS) techniques on data spanning from 1991 to 2021, we provide insights into the vital role of digitalization and energy choices in reducing CO₂ emissions and advancing towards carbon neutrality. The Westerlund cointegration results indicate a long-run relationship among all the variables. Quantile regression findings reveal that economic growth, nonrenewable energy consumption and green technology adoption affect CO₂, while digitalization and green energy consumption help reduce CO₂. The POLS results confirm the quantile regression outcomes, enhancing the robustness of the analysis. Additionally, the Dumitrescu-Hurlin panel causality test shows that all the variables significantly predict CO₂ and vice versa. Based on these findings, we propose green growth policies supported by renewable energy and technological advancements to help E7 countries achieve their net-zero emission targets.