The Symmetric and Asymmetric Effects of Governance on Natural Resources Dependence in GCC Countries
DOI:
https://doi.org/10.14738/assrj.1302.19962Keywords:
Governance quality, natural resource dependence, asymmetric effects, macroeconomic instability, GCC countriesAbstract
The current study examined the symmetric and asymmetric effects of governance quality on natural resource dependence in the Gulf Cooperation Council (GCC) countries from 1996 to 2023. Governance quality was measured using a composite index derived from the Worldwide Governance Indicators, recording institutional effectiveness, regulatory quality, and control of corruption. The analysis applied the Pooled Mean Group (PMG) and Dynamic Common Correlated Effects (DCCE) estimators using panel data techniques to identify long-term relationships while accounting for heterogeneity and cross-sectional dependence. Furthermore, a Nonlinear Autoregressive Distributed Lag (NARDL) model was employed to document asymmetric dynamics. The results revealed that improvements in governance generate statistically significant and economically meaningful reductions, depending on natural resource rents, by strengthening institutional capacity and supporting economic diversification. Conversely, population growth, inflation, and exchange rate volatility raise natural resource dependence by intensifying fiscal pressures and macroeconomic instability, while economic growth consistently mitigates reliance. Therefore, governance improvements yield stronger and more persistent reductions in resource dependence than those associated with governance deterioration, emphasising the importance of sustained institutional reform and macroeconomic stability for GCC diversification strategies
References
Abdelkawy, N.A., Diversification and the resource curse: An econometric analysis of GCC countries. Economies, 2024. 12(11): p. 287.
Ben Mim, S. and M.S. Ben Ali, Natural resources curse and economic diversification in GCC countries, in Economic Development in the Gulf Cooperation Council Countries: From Rentier States to Diversified Economies, 2020. p.1–18.
Frankel, J.A., The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions. 2012, Harvard University, John F. Kennedy School of Government. (Working Paper Series rwp12-014).
Sachs, J.D. and A.M. Warner, Natural resource abundance and economic growth. 1995, National Bureau of Economic Research. (NBER Working Paper No. 5398).
Amiri, A., M. Ghalandari, and S. Amiri, Resource dependence, governance and economic vulnerability: Evidence from developing countries. Resources Policy, 2019. 64: p. 101525.
Barbier, E.B. and J.C. Burgess, Institutional Quality, Governance and Progress towards the SDGs. Sustainability, 2021. 13: p. 11798.
Zallé, O., Natural resources and economic growth in Africa: The role of institutional quality and human capital. Resources Policy, 2019. 62: p. 616–624.
Çimen, G. and Ö.F. Biçen, The Impact of Institutional Quality on Fiscal Discipline: An Analysis of OECD Countries. Sosyoekonomi, 2025. 33(63): p. 31–51.
Kibria, M. and M. Toufique, Institutional governance and quality of life: evidence from developing countries. SN Business & Economics, 2023. 3: p. 1–20.
Lashitew, A.A. and E. Werker, Do natural resources help or hinder development? Resource abundance, dependence, and the role of institutions. Resource and Energy Economics, 2020. 61: p. 101183.
Ben-Salha, O. and M. Zmami, Natural resources dependence and institutional quality in MENA countries: Evidence from nonlinear panel analysis. Resources Policy, 2023. 80: p. 103226.
Shehzad, K., U. Zaman, M. Ahmad, and E. Koçak, Governance, financial development, and environmental degradation: evidence from symmetric and asymmetric ARDL. Environment, Development and Sustainability, 2022. 25: p. 14643–14660
Mpuure, D.M.-N. and J.D. Mengba, Natural resource dependence, policy and institutions for environmental sustainability and African welfare. Sustainable Development, 2024. 32(3): p. 2176–2193.
Wijaya, M., W. Wijianto, and M. Himmawan, Determinants of foreign direct investment in GCC (Gulf Cooperation Council) countries: Analysis of economic growth, inflation, and political stability for the period 2002–2018. Review of Islamic Economics and Finance, 2021. 4(2).
Poniatowicz, M., R. Dziemianowicz, and A. Kargol-Wasiluk, Good Governance and Institutional Quality of Public Sector: Theoretical and Empirical Implications. European Research Studies Journal,2020. p. 529–556. Scholar Publishing
Gaies, B., M. Nakhli, and J. Sahut, Is Financial Globalization Polluting? – Symmetric and Asymmetric Effects of External Liabilities on CO₂ Emissions in the MENA Region, 2021.
Aljarallah, R., Natural resource dependency, institutional quality and human capital development in Gulf countries. Heliyon, 2020. 6: p. e04290.
Maalel, N. and H. Mahmood, Oil-Abundance and Macroeconomic Performance in the GCC Countries. International Journal of Energy Economics and Policy, 2018. 8: p. 182–187.
Mahmood, H., The effects of natural gas and oil consumption on CO₂ emissions in GCC countries: asymmetry analysis. Environmental Science and Pollution Research, 2022. 29: p. 57980–57996.
Gylfason, T., Natural resources, education, and economic development. European Economic Review, 2001. 45(4–6): p. 847–859.
Acemoglu, D. and J. Robinson, 2012.
Totouom, et al., 2024.
Gu, et al., 2021. Page | 60
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Ali Ayad Hasan Alrubaye, Judhiana Abd Ghani, Ainatul Aqilah Kamarudin, Amir Makhif Al-Jubouri
This work is licensed under a Creative Commons Attribution 4.0 International License.
