Impact of Natural Resource Rents and Governance on Economic Growth in Major MENA Oil-Producing Countries

This study analyzes the influence of natural resource rents, governance indicators, and their interactions on economic growth in twelve oil-producing countries in the MENA region from 2002 to 2021. Various versions of a panel ARDL model are estimated using PMG, MG, and DFE estimators. The results suggest that natural resource rents in MENA oil-producing countries positively affect long-term economic growth when accompanied by good governance. Government effectiveness and control of corruption also contribute positively to economic growth in the long run. Furthermore, financial development is found to enhance long-term economic growth. These findings highlight the potential of natural resources to drive economic growth when supported by strong institutions. To maximize natural resource rent benefits, MENA countries should improve governance indicators such as government effectiveness, control of corruption, and rule of law. This includes enhancing civil service competence, decision implementation, and managing political pressure. Key factors include revenue mobilization, infrastructure quality, policy consistency, and penalties for corruption. Ensuring equality under the law, transparent legal processes, an independent judiciary, and access to legal remedies are crucial for effective rule of law. Additionally, MENA countries should prioritize developing non-oil sectors like tourism, industry, technology, entertainment, transportation, and communication.