Economic performance of OPEC member countries: The impact of natural capital, financial capital and institutional management framework

This dissertation examines the cross-country and country-level economic performance of OPEC member countries, and tests the impact of natural capital, financial capital and institutional management framework. This study also evaluates the impact of standard neoclassical production factors of physical capital and labor on the economic performance of these countries. These oil-producing countries have largely been ignored in contemporary empirical studies and published literature on economic growth and performance, even as the impact of their vast petroleum resource endowment and the related production and pricing implications continue to dominate and drive global economic systems and conditions. This research specifies and tests linear regression models with gross domestic product per capita as the dependent variable and measure of economic performance. The various independent variables include the standard neoclassical production factors of physical capital and labor, as well as three new factors of natural capital, financial capital and institutional management framework. The dissertation scope covers the thirty-five-year period from 1970 to 2005. The dissertation extends the standard neoclassical and endogenous growth models to include the new independent variable factors of natural capital as a measure of natural resource endowment from crude oil production and pricing; financial capital as a measure of country-level financial development; and institutional management framework as a measure of the quality of the social environment and economic infrastructures that characterize the economic systems. This dissertation expands the dimensions of capital beyond the physical capital specified in standard neoclassical economic theory models and production function, to include the two new factors: natural capital and financial capital. The dissertation also extends standard economic growth models to include and directly test the impact of institutional management framework. The empirical findings demonstrate that natural capital significantly explains and contributes to the economic performance of OPEC member countries, contrary to the basic foundational assumption of neoclassical economic growth theory that land and natural resources play no significant role in economic growth and performance. The study also finds that financial capital and institutional management framework significantly impact economic performance, contrary to the implicit assumptions of standard economic growth theory and wide-ranging published economic literature.