Growth in Oil- and Non-Oil-Producing Countries: Domestic Policies and External Spillovers
Published: December 2018
Using data for a sample of oil- and non-oil-producing countries this article studies determinants of growth to assess the relative importance of domestic policies and external spillovers. For net oil exporters, a higher price of oil helps increase resources for spending and available liquidity to support real growth. For net oil importers it increases the cost of imports and government spending on fuel subsidies with a negative effect on real growth. The mechanism transmitting the oil price shock is more evident in developing countries than in advanced oil-producing countries, attesting to less diversified economies in the first group. Across the samples of countries under investigation, advanced and developing oil- and non-oil-producing countries, domestic policies have considerable ability to counter the spillover effects of external shocks.