Effect of Oil Revenues on Economic Development under Algeria's E-Economy

Abstract

This study examines the dynamic relationship between petroleum revenues and economic development trajectories in Algeria within the context of transitioning toward an e-economy over the period 2000–2025. Utilizing an Autoregressive Distributed Lag (ARDL) econometric framework and Bounds Testing approach, the empirical estimation captures both short-run dynamics and long-run equilibrium relationships among hydrocarbon receipts, internet penetration, inflation, and economic development indices. The empirical results demonstrate that petroleum revenues exert a positive and statistically significant impact on economic development (0.19), confirming the historical dependence of national infrastructure and public investment on resource rents. Crucially, the transition toward the e-economy—proxied by internet usage—significantly enhances economic development levels (0.10) by lowering transaction costs and boosting productivity, while price stability supports sustainable growth (0.02). Diagnostic tests and CUSUM/CUSUMSQ stability checks confirm the structural robustness of the model. Consequently, the study recommends strategically rechanneling temporary hydrocarbon surpluses into foundational digital infrastructure, tech enterprise ecosystems, and anti-inflationary monetary frameworks to insulate the Algerian economy from energy market volatility and ensure sustainable structural diversification.