Topics in Middle Eastern and North African Economies

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The present paper aims, on the one hand, to test the impact of oil rents on economic growth and examine the main symptoms of the resource curse phenomenon in oil-abundant MENA countries, and on the other hand, to investigate the role of governance in avoiding the resource curse and turning oil rents into a tool for economic diversification in 11 MENA oil exporters (Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, United Arab Emirates, and Yemen) over the period 1996-2014, by using pooled OLS, fixed effects, random effects and generalized method of moments (GMM) estimators. The main findings indicate that MENA oil exporters’ growth is greatly and positively influenced by oil rents. Likewise, these economies have been diagnosed with resource curse. The results also show that governance is a key ingredient in the diversification recipe, while, oil rents frustrate economic diversification by encouraging rent-seeking activities. The multiplicative interaction term between governance index and oil rents indicates that the combined effect of these two variables is effective in promoting diversification. In a nutshell, the enhancement of MENA oil-exporters’ good governance capabilities is the way out of the resource curse because it can turn oil wealth into a boon and offer these oil-abundant countries more opportunities for economic diversification and thereby can enable them to generate robust and sustainable economic growth.

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Topics in Middle Eastern and North African Economies




Middle East Economic Association and Loyola University Chicago






Presentation of the articles in the Topics in Middle Eastern and North African Economies was made possible by a limited license granted to Loyola University Chicago and Middle East Economics Association from the authors who have retained all copyrights in the articles.

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