TOWARDS TO NEW ILLUSTRATION OF RESOURCE CURSE: FDI CHANNEL EMPIRICAL EVIDENCE FROM GULF COOPERATION COUNCIL (GCC) COUNTRIES

This paper extends a high influential contribution by Poelhekke and Van der Ploeg (2013), on the new mechanism of natural resource curse which is FDI. Using panel data of FDI inflows (aggregate and disaggregate) for six oil dependent countries (GCC) during a period 1980-2013; our main findings are as follows. First, total FDI is negatively correlated with natural resources measured by oil prices constant 2000 in the long run and short term. This negative impact ranged between 0.21% and 0.41% if oil prices changed by one percent increase. Secondly, FDI in resource sector falls by around 0.44-0.47%, but non-resource FDI increased by about 0.21-0.29% when the interaction term between oil revenues and initial oil prices (1980) increases by 1%. These results are robust even after including other FDI determinants.