• Program Energy Macro & Micro-economics Energy Macro & Micro-economics
  • Type Discussion paper
  • Date 20 January 2025
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Abstract

Governments in oil-dependent countries, particularly those in the Gulf, have launched broad and ambitious national plans to diversify their economies. While diversification reduces vulnerability to oil shocks, the expansion of renewables and the deregulation of domestic energy prices decrease domestic oil consumption, leading to higher oil exports and greater exposure to oil price volatility. We develop a simple Dutch disease model to demonstrate that immigration can mitigate this exposure by limiting the contraction of the non-energy tradable sector during windfall periods. This effect holds even when accounting for remittance outflows. To empirically validate our model’s predictions, we estimate a structural panel vector autoregressive model using data from GCC countries. Consistent with our theoretical results, energy windfalls act as a pull factor for immigration, which in turn raises manufacturing production in both the short and long run.

Authors

Dramane Coulibaly

Dramane Coulibaly

Fatih Karanfil

Principal Fellow- Energy Macro & Microeconomics Fatih is an economist who is interested in energy and environment. Before joining KAPSARC in December 2017, he was an…

Fatih is an economist who is interested in energy and environment. Before joining KAPSARC in December 2017, he was an Associate Professor of Economics at the University of Paris Nanterre and was a Fellow at EconomiX-CNRS in France. During this period, he conducted research, taught courses in energy economics, environmental economics, and econometrics, and contributed to projects funded by organizations such as the European Renewable Energy Council, the French Energy Council, and Région Île-de-France.

Fatih’s work at KAPSARC mainly focuses on developing economic frameworks to provide insights into energy and economic policymaking in oil-producing countries, particularly Saudi Arabia. His research appears in leading journals in energy economics as well as general-interest economics journals.

He received his Ph.D. in Economics from the University of Paris 1 Panthéon-Sorbonne in 2008. Prior to that, he completed an M.A. in Economic Analysis and Modeling jointly offered by the University of Paris 1 Panthéon-Sorbonne and École Centrale Paris. Fatih also holds an HDR degree, which is a French accreditation to supervise doctoral research.

Expertise

  • Energy Economics
  • Environmental Economics
  • Applied Economics

Publications See all Fatih Karanfil’s publications

Luc Desire Omgba

Luc Desire Omgba

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