Is there a resource curse phenomenon for natural gas? Evidence from countries with abundant natural gas

This study focuses on the natural gas-economic growth nexus and intends to test the hypothesis of the resource curse. Panel data techniques were applied to investigate the role of natural gas in economic growth for 25 producers of natural gas, from 1993 to 2015. Three different approaches were used and compared to test the resource curse hypothesis, namely: production, reserves, and rents. Due to the data's characteristics, an Autoregressive Distributed Lag model (ARDL) proved to be the most suitable for capturing the dynamic relationship in short- and long-run effects. The Driscoll-ICray estimator with fixed effects was used, given the presence of the phenomena of heteroskedasticity, first order autocorrelation, contemporaneous correlation and cross-sectional dependence. Results suggest that natural gas consumption drives economic growth in both the short- and long-run. There is some kind of evidence of the resource curse phenomenon, but only in the production approach. Policymakers should understand the characteristics of natural gas as a transitional source. Indeed, it seems that natural gas does not fit the pattern of dependency as is historically observed in other natural resource producers' countries, such as oil.