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Biography

Publications

See all Luc’s publications
  • Discussion papers
  • KAPSARC journal article
  • Think20 (T20)
Windfalls and Pitfalls: How Foreign Labor Strengthens Economic Resilience in GCC During Energy Transition

Windfalls and Pitfalls: How Foreign Labor Strengthens Economic Resilience in GCC During Energy Transition

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.

20th January 2025
The Energy Transition and Export Diversification in Oil-Dependent Countries: The Role of Structural Factors

The Energy Transition and Export Diversification in Oil-Dependent Countries: The Role of Structural Factors

The energy transition toward decarbonization is expected to impact producers of fossil fuels. However, oil-exporting countries are currently key players in the modern economy. Thus, the energy transition will not be successful if state revenues in these countries are not stably maintained. These countries can protect themselves against revenue volatility and mitigate carbon risk by diversifying their economies. However, export diversification appears to be particularly challenging for many oil-producing countries.

11th May 2023

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