From Black Gold to Green Goals: Can MENA Escape the Resource Curse

Abstract This study examines the role of institutional quality, economic development, and energy consumption in shaping sustainable development outcomes in the Middle East and North Africa (MENA) region. Using data from 2002 to 2022 across 16 MENA countries, this research employs a fixed-effects econometric model to analyze the Sustainable Development Index (SDI) determinants. The findings reveal significant yet paradoxical relationships: while governance quality (measured by government effectiveness) negatively correlates with SDI, trade performance (net exports) has a modest positive impact. Renewable energy consumption and foreign direct investment show limited influence, highlighting the systemic barriers to leveraging these factors for sustainability. A key contribution of this study is its differentiation between oil-exporting and oil-importing countries, uncovering stark contrasts in the governance-energy nexus. For oil exporters, governance reforms often prioritize resource extraction, undermining sustainability goals. Conversely, oil importers exhibit better alignment of governance and renewable energy policies, though challenges persist. Interaction analyses further emphasize the critical role of governance in amplifying the benefits of renewable energy and economic activity, particularly in resource-dependent contexts. The findings highlight the need for tailored policies that address structural dependencies, align governance reforms with sustainability objectives, and foster renewable energy adoption. By providing a clear understanding of the drivers of sustainability in one of the world’s most climate-vulnerable regions, this study offers actionable insights for policymakers. It enriches the academic discourse on sustainable development in resource-dependent economies.