Estimating the Income Counterfactual for Oil Producing Countries of the MENA Region

How much richer would oil producing countries in the Middle East be if they invested all their natural resource rents? This study tries to answer this question by calculating the counterfactuals of capital stock and income under two major scenarios. Combining several data sets, including a unique set on sovereign wealth funds, it finds that oil-producing MENA economies could have had, on average, around a 0.55 percentage point higher growth rate if they had used their natural resource rents efficiently. This difference in growth rate translates to around 25% higher income over a 40 year period. These numbers are separately calculated for each country and their important policy implications are discussed.