The Environmental Curse in Oil Dependence Countries: A Missing Dimension of the Oil Curse

Abstract

Objective: We build on prior studies by perhaps shedding light on the murky relationship in Oil-dependent countries. The study aims to expand the concept of the contractual oil curse and suggests another channel that may not be addressed as one of the oil curse channels. Accordingly, there remains little understanding of the oil curse by which the environmental dimension brings a new manifestation.   Methods: In this study a sample of 21 oil-dependent economies were analysed from 1995-2018, using the Pooled Mean Group (PMG) and a dynamic panel technique that is heterogeneous.   Results: The results empirically prove the negative influence of the connection between CO2 emissions and oil consumption. As a result, we identified a symptomatology of the oil curse via a new transmission method under the environmental domain. Depending on the transmission method, natural resources can either be a benefit or a curse.  Our study found evidence supporting the concept of the oil curse taking place through the environmental channel (CO2 emissions).   Conclusion: Hence, the presence of this negative relationship has a new purpose in the debate about the oil curse and its environmental impact. Policy research needs to be conducted to understand and mitigate the oil curse.