The Role of Human Capital and the Government Institutions Quality in Overcoming the Oil Resource Curse - The case of Algeria during the period 2000-2016

Abstract

The purpose of this research paper is to review the issue of the natural resource curse, which is one of the topics that researchers have not yet reached the same results around. To achieve this, we have included elements of the knowledge base, such as human and physical capital, to see if human capital can transform the curse of petroleum resources into economic growth and increase the welfare of individuals in an oil-dependent economy. We used the VAR model, which explains the impact of human capital, the revenues of petroleum resources and the quality of government institutions on the per capita GDP of Algeria during the period 2000-2016. We relied on a set of data from the World Bank database relating to the Algerian economy during the period 2000-2016. The results showed that human capital had a negative and insignificant effect on GDP per capita. The same effect was recorded for oil revenues. The Corruption Control Index had a negative and significant effect on per capita gross domestic product (GDP), and the increase in corruption by 01% leads to a reduction of per capita gross domestic product by 13.42%.