Why Do Some Oil-Rich Countries Perform Better Than Others?

Among the many oil-rich countries in the world, some have done far better in terms of improving the standards of living of their citizens than others. Why has this been so? This paper attempts to answer this question using long run changes in two aspects of the standard of living, the child mortality rate and the secondary education enrollment rate.

Does performance with respect to these indicators vary among oil rich countries? Consider Figure 1 below that shows a fractional-polynomial regression of the change in child mortality rates (number of deaths among children under 5 years of age per 1,000 births) during 1970-2010 on the initial child mortality rates prevailing in each country circa 1970. To show the diversity in performance among oil rich countries, we have labeled all oil rich countries from the Middle East and North African (MENA) region as well as all oil rich countries from the Sub-Saharan Africa (SSA) region. All the MENA countries (except Iraq) are located above the regression line while all the SSA countries are below the line. In other words, all the MENA countries (save Iraq) achieved larger changes over time than predicted by their initial levels of child mortality while the SSA countries achieved smaller ones.

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Why Do Some Oil-Rich Countries Perform Better Than Others?
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Author: Farrukh Iqbal, Youssouf Kiendrebeogo

Date Published: 17 May, 2017

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Oil
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