Natural Resources, Institutional Quality And Economic Development In Oil-rich Countries: The Case Of Arab Countries

This paper attempts to interacted different measures of institutional quality and oil dependence to provide an answer to the following question: Why Arab oil-rich countries develop at a slower rate compared with less fortunate ones? To achieve that, we apply a panel data model to data on oil dependence variables, economic development and several institutional variables in 08 Arab countries over the period 1996 to 2015. The empirical results reveal that the higher level of Regulatory Quality and Rule of Law is most potent in delivering economic growth these countries. The results also shed light on the fact that the countries with high-quality institutions natural resources enhance economic development while most of the Arab oil-rich countries have an insufficient institutional quality to insulate the economy from the resource curse.