Exhaustible Resources and Sustainable Growth: Evidence from Libya

Taloba, Abdelatif I; Bhattarai, Keshab R

Abstract

Natural endowments and economic growth are often connected. However, this relationship is still controversial. Although natural resources are crucial for economic growth, there is a kind of puzzling aspect in their relationship. For the oil-based economies, the negative impact becomes clear. This paper explores how far extracting oil and using its revenues are affecting the economic growth in Libya as an example of a highly dependent economy on natural resources. Applying Charles Jones model for this purpose and utilising data for the period of (1962-2017). The paper explores the potential impacts of natural resources on changes in output controlled with population growth. This model explains the influences of both natural resources and population growth on economic growth. Findings confirmed the natural resource curse in the Libyan economy and showed that it experiences an unbalanced growth. Furthermore, even if the growth rate is adjusted to the Balanced Growth Path BGP, it seems to decline over time as population growth is higher than natural resources can cope. Authority needs to use more proportions of oil (Higher depleting rate) if the previous standards of living to be maintained. This means that along with recent population growth, the resources available eventually depletes, would not be sufficient to prevent a foreseen problem.

Citation

Taloba, A. I., & Bhattarai, K. R. (2020). Exhaustible Resources and Sustainable Growth: Evidence from Libya. Journal of Development Economics and Finance, 1(2), 361-384

• Journal Article Type: Article
• Acceptance Date: Nov 16, 2020
• Online Publication Date: Dec 30, 2020
• Publication Date: Dec 30, 2020
• Deposit Date: Feb 15, 2021
• Publicly Available Date: Oct 27, 2022
• Journal: Journal of Development Economics and Finance
• Publisher: ARF India
• Peer Reviewed: Peer Reviewed
• Volume: 1
• Issue: 2
• Pages: 361-384
• Series ISSN: ISSN :- 2582-5194
• Keywords: Non-renewable resources; Economic growth; Macroeconomics.
• Public URL: https://hull-repository.worktribe.com/output/3724813
• Publisher URL: http://arfjournals.com/abstract/40099_7_abdelatif.pdf