Book contents
- Understanding and Avoiding the Oil Curse in Resource-rich Arab Economies
- Understanding and Avoiding the Oil Curse in Resource-rich Arab Economies
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Foreword
- Acknowledgments
- 1 Overview of Context, Issues and Summary
- 2 The Global Impact of the Systemic Economies and MENA Business Cycles1
- 3 Real Exchange Rates and Export Performance in Oil-dependent Arab Economies*
- 4 Dutch Disease in the Services Sector
- 5 The Political Economy of Public Sector Employment in Resource-dependent Countries1
- 6 The Oil Curse and Labor Markets
- 7 Resource Rents, Political Institutions and Economic Growth*
- 8 Fiscal Institutions in Resource-rich Economies
- 9 Savings and Investment Decisions from Natural Resource Revenues
- 10 Labor Market Heterogeneity and Optimal Exchange Rate Regimes in Resource-rich Arab Countries
- 11 The Institutional Curse of Natural Resources in the Arab World1
- 12 Has the UAE Escaped the Oil Curse?
- 13 Understanding and Avoiding the Oil Curse in Sudan
- Index
- References
4 - Dutch Disease in the Services Sector
Evidence from Oil Exporters in the Arab Region
Published online by Cambridge University Press: 05 July 2016
- Understanding and Avoiding the Oil Curse in Resource-rich Arab Economies
- Understanding and Avoiding the Oil Curse in Resource-rich Arab Economies
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Foreword
- Acknowledgments
- 1 Overview of Context, Issues and Summary
- 2 The Global Impact of the Systemic Economies and MENA Business Cycles1
- 3 Real Exchange Rates and Export Performance in Oil-dependent Arab Economies*
- 4 Dutch Disease in the Services Sector
- 5 The Political Economy of Public Sector Employment in Resource-dependent Countries1
- 6 The Oil Curse and Labor Markets
- 7 Resource Rents, Political Institutions and Economic Growth*
- 8 Fiscal Institutions in Resource-rich Economies
- 9 Savings and Investment Decisions from Natural Resource Revenues
- 10 Labor Market Heterogeneity and Optimal Exchange Rate Regimes in Resource-rich Arab Countries
- 11 The Institutional Curse of Natural Resources in the Arab World1
- 12 Has the UAE Escaped the Oil Curse?
- 13 Understanding and Avoiding the Oil Curse in Sudan
- Index
- References
Summary
This chapter shows that as per capita incomes increase, services sectors in resource-rich countries of the Arab World have declined as a share of gross domestic product (GDP) and of non-mining GDP. This negative relationship between the share of services in GDP and income per capita is opposite to global patterns and is linked to the large rents generated by natural resources in these countries. A large number of services sectors can now be contracted offshore or can be produced by temporary movement of service providers, implying that countries need to be competitive to maintain domestic production. Since rents from natural resources inflate wages and non-tradable prices, they tend to discourage domestic production of tradables, both goods and services. As the chapter highlights, the negative effect of rents are compounded by the negative impact of policy and regulatory restrictions on entry, and of business conduct on the development of services sectors. These restrictions create rents captured by “protected incumbents” or increase the real cost of producing services – in both cases inflating the price of services.
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- Publisher: Cambridge University PressPrint publication year: 2016
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