Resource Curse Hypothesis in GCC Member Countries: Evidence from Seemingly Unrelated Regression

The economies of Gulf Cooperation Council (GCC) member countries rely heavily on oil and gas for their total fiscal and export revenues. But, the level of their dependency varies considerably across member countries which pose a structural policy challenges to GCC policy makers. This study examined the effect of oil and natural gas rents on economic growth in GCC member countries during the period 1984–2021. The study applied recent bootstrap panel cointegration test and seemingly unrelated regression (SUR) method and found that oil rent has a positive and significant impact on economic growth in Kuwait and United Arab Emirate, disputing the resource curse hypothesis. Similarly, natural gas rent impacted positively on the economic growth in Bahrain and Qatar. However, oil rent exerts a negative and significant impact on economic growth in Bahrain, Qatar, and Saudi Arabia. The policy implication suggest that rents from both oil and natural gas should be used to diversify their economies by investing in areas of comparative advantage of the region’s abundant hydrocarbons such as petrochemicals and other related refined hydrocarbons industries which will, in turn, stimulates economic growth.