The impact of crude oil exports on economic growth in GCC countries

The discovery of the oil in the Gulf Cooperation Council (GCC) countries increased their strategic and economic significance in the Middle East, specifically, and the world, generally. The GCC countries have reaped the benefits of the oil revenues making them one of the affluent countries in the globe. Therefore, the crude oil exports massively participate in financing the governmental spending and development plans. Accordingly, studying the relationship between crude oil exports and economic growth shows significance nowadays, especially because of the variations occurring in the oil markets. This study aimed to assess the impact of the crude oil exports on the economic growth in GCC countries during the periods from 1970 to 2018 using a balanced panel data set. First, cross-sectional dependence in series and errors and the slope heterogeneity of the cross sections were approved. Furthermore, Panel unit root tests from 2nd generations were used to examine the stationarity of the variables in the presence of both the cross-sectional dependency and the structural breaks. Then, the panel cointegration tests from 2nd generations that taking account for crosssection dependency, structural breaks and unobserved factors approved the cointegration relationship, and accordingly the breaks were estimated. After that, the long-run elasticities were estimated using several estimators (i.e. AMG, CS-ARDL and CS-DL). Finally, the bootstrap panel causality with 10000 replications supported the causality direction from the crude oil exports to the economic growth in most of GCC countries, and the inverse case was also detected in some countries. However, the pooled causality supported the bidirectional causal linkages. The outcomes illustrate that crude oil exports positively affect the economic growth in the short and long term. This contradicts the hypothesis of the curse of resource abundance and provide evidences that support the hypothesis of oil exports-led growth, in the GCC countries.