Institutional Quality, Economic Complexity, and the Curse of Natural Resources; New Evidence from MENA Countries

Document Type : Scientific paper

Authors

1 PhD student in Economics, Faculty of Economics, University of Sistan and Baluchestan, Zahedan, Iran

2 Professor, Faculty of Economics, University of Sistan and Baluchestan, Zahedan, Iran.

Abstract

Considering the need to speed up economic growth in developing countries, several studies have addressed this issue from different aspects. In the meantime, how natural resources affect economic growth is controversial. A group of economists attribute the slow economic growth to the curse of natural resources and the subsequent Dutch disease. Another group believes that important variables such as institutional quality and the diversity of the economy can be involved in this issue. In this regard, the present study examines the role of institutional quality and economic diversity in the effect of natural resource rent on growth in selected countries of the MENA region in 2002-2018. The results of applying the Generalized Method of Moments (GMM) showed that natural resources have a negative effect on economic growth, confirming the resource curse hypothesis. However, its interaction with institutional quality and diversity causes the effect of natural resources on economic growth. Based on this, the improvement of institutional quality through governance can be considered as a determining factor in the effect of natural resource rent on economic growth.

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Main Subjects

References

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Macroeconomics Research Letter
Volume 18, Issue 37
December 2023
Pages 139-160

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History

  • Receive Date: 15 December 2023
  • Revise Date: 24 December 2023
  • Accept Date: 26 December 2023

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