Natural Resource Rents and Economic Development: Evidence from Brunei Darussalam

Abstract

This chapter examines Brunei Darussalam’s economic development from the perspective of an oil and gas-dependent economy. First, using relevant socio-economic indicators, it assesses the economic structures, tracing their evolution to their current forms, the dynamics of Brunei’s reliance on the oil and gas sector, and the relative importance of the non-oil and gas sector in its economic progress. Is Brunei’s experience with oil and gas dependency in line with the ‘resource curse’ or ‘resource blessing’ viewpoints? What do the data say? The analysis provides answers to these questions by quantifying short- and long-run effects of oil and gas rents on economic growth over the 1970–2019 period using the dynamic time series econometric modelling framework of the autoregressive distributed lag (ARDL) model. Given the importance of economic diversification in achieving Wawasan Brunei 2035 (Brunei Vision 2035), the chapter further discusses its progress and challenges.