| Summary: | Economic growth is what mainly determines the material wellbeing of human beings and anything that retards that wellbeing should be investigated so that it can be understood, and, where possible, rectified. Scotland's economic growth rate, in terms of GDP and per capita GDP, has lagged that in the rest of the UK for some time and this thesis hypothesises that, perhaps, North Sea oil exploitation might explain at least some of that lower growth. This thesis analyses the natural resource curse hypothesis with particular focus on North Sea oil and its impact on the Scottish economic growth rate between 1970 and 2006 and asks whether Scotland's economic growth rate has been retarded since North Sea oil and gas first came to be exploited in a major way in the mid-1970s. This retardation of economic growth, when linked to natural resource abundance, is known as the natural resource curse. An important complication is that Scotland was part of the United Kingdom during this period, albeit one with a devolved government since 1999. Consequently, the thesis makes several assumptions in an attempt to disaggregate the economy of the UK into Scotland and the rest of the UK. The thesis makes three findings: Scotland was on an unsustainable consumption path between 1970 and 2006; cross-sectional analysis shows a 0.22% shortfall in the Scottish GDP per capita growth rate relative to that in the rest of the UK; analysis of a panel of data demonstrates that North Sea oil exploitation reduced the Scottish long-run growth rate by -0.29% per year. Taken as a whole, the evidence provided by the thesis suggests that Scotland might have been better off, in growth rate terms, without the discovery of North Sea oil and therefore suggests that Scotland is a victim of the natural resource curse.
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