Investigating the role of income distribution in how oil revenues affect economic growth: PSTR Approach

Document Type : Original Article

Authors

1 Ph.D. candidate of Economics, Urmia University

2 Assistant Professor of Economics, Faculty of Economics & Management, Urmia University

3 Professor of Economic, Urmia University.

10.48308/jem.2025.238160.1965

Abstract

The management of revenues from oil sales and its effects on economic growth is one of the challenges facing resource-based economies, including Iran. Empirical results from previous studies examining the impact of oil revenues on economic growth in oil-rich countries have raised many questions about why oil revenues have not generated the expected growth in some of these countries and, in some cases, have even hindered economic growth. Consequently, researchers have investigated the conditions of these countries to answer this question. Therefore, this article aims to examine this controversial question by assuming a nonlinear relationship between oil revenues and economic growth while considering the income distribution conditions of the countries in this relationship. For this purpose, a panel smooth transition regression model has been used for eight oil-rich countries in the Persian Gulf during the period from 2000 to 2023. The empirical results confirm the nonlinearity of this relationship and identify a threshold level of income inequality, emphasizing that if the level of inequality is below the threshold, oil revenues have positive impact on economic growth, whereas at higher levels of inequality, an increase in oil revenues leads to a decrease in economic growth.

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