Investigation of the Relationship between Oil Revenues and Gross Domestic Product with an Emphasis on Domestic Financial Markets (Case Study: Crude Oil Producing Countries

Subject Areas : Business Strategy

Seyed Jafar Mowlaei ¹ , Seyed Nematollah Mousavi ^{2 *} , Abbas Aminifard ³

1 - Islamic Azad University, Marvdasht Branch, Marvdasht, Iran
2 - Islamic Azad University, Marvdasht Branch, Marvdasht, Iran
3 - Islamic Azad University, Shiraz Branch Shiraz, Iran

Received: 2025-03-28 Accepted : 2025-06-10 Published : 2025-09-25

Keywords: Oil revenues, economic growth, domestic financial markets, GMM,

Abstract :

Oil and its derivatives are among the non-renewable natural resources that constitute a significant portion of the annual income of several countries. A critical question that arises in this context is whether oil revenues can foster economic growth and development in oil-producing nations or not. Additionally, given the increasing importance of domestic financial markets in recent years, it is essential to examine these markets to better understand the relationship between economic growth and oil revenues. This study investigates the oil revenues and economic growth, with a particular focus on domestic financial markets in crude oil-producing countries, using the Generalized Method of Moments (GMM) method in the period from 2000 to 2020. The results showed that the lagged variable of gross domestic product per capita, the variable of domestic credit to the private sector by banks, and the variable of private credit by monetary banks and other financial institutions to GDP influence GDP per capita. Furthermore, the coefficient for the share of oil revenues in total income is negative, though not statistically significant. In other term, in oil-producing countries, an increase in oil revenues is associated with a decrease in GDP per capita, indicating that oil revenues have not been able to play a substantial role in the economic growth of these nations.

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