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Demographic change and economic growth: The role of natural resources in the MENA region

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  • Polyzos, Efstathios
  • Kuck, Simon
  • Abdulrahman, Khadija

Abstract

This paper analyses the conditional effect of demographic change on economic development in the MENA region. We employ fixed-effects panel analysis on data from 19 countries in the region and demonstrate a negative impact of natural rents on the relationship between the working-age population and economic growth. Once the critical level of approximately 16% of resource rents (as share in total GDP) is reached, a one-unit increase in working-age population appears to harm economic growth. Further tests show that this finding is mainly driven by the negative effects of resource rents on female labor force participation. However, other drivers are a large public sector, low private sector development and inefficient labor market policies and issues such as the “Dutch disease”. The main finding remains after robustness checks in the form of controlling for competing hypotheses. Policy makers are advised to encourage economic diversification, female employment and private sector development.

Suggested Citation

  • Polyzos, Efstathios & Kuck, Simon & Abdulrahman, Khadija, 2022. "Demographic change and economic growth: The role of natural resources in the MENA region," Research in Economics, Elsevier, vol. 76(1), pages 1-13.
    • Handle: RePEc:eee:reecon:v:76:y:2022:i:1:p:1-13
    DOI: 10.1016/j.rie.2022.03.001
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    JEL classification:

    • N55 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Asia including Middle East
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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