Abstract:
This paper investigates the effect of oil rents on agriculture value added in oil producing Middle East and North
African (MENA) countries. Annual data from1970 to 2011, panel cointegration tests by Pedroni (1999), long ran
panel causality tests by Canning and Pedroni (2008), and two-step SystemGMMby Blundell and Bond (1998) are
used in this study. We find a negative relationship between oil rents and agriculture value added in the long run,
with a rather slowrate of short run adjustment of agriculture value added back to equilibriumafter a boomin oil
rents. These results indicate that an oil sector boom is associated with a contraction in the agriculture sectors of
the countries in the panel in the long run. This is probably attributable to a resource movement effect from other
economic sectors to the booming oil sector in these countries. This serves as evidence of a Dutch disease effect of
an oil sector boom on agriculture in the MENA countries in this study.
