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The effects of institutions and natural resources in heterogeneous growth regimes

Author

Listed:
  • Yacine Belarbi
  • Lylia Sami
  • Saïd Souam

Abstract

The dependence on natural resources is the subject of a wide debate in the analysis of economic growth in rentier States. Up to now, there is no consensus about the way natural resources could impede or boost the economic development of such endowed countries. The same mitigated results are found concerning the interaction between institutions and growth. In this paper, we examine the combined interaction effects of natural resource dependence and the quality of institutions on economic growth by using a panel threshold regression methodology. We show that the effect of natural resource dependence on economic growth becomes positive when the quality of institutions improves. Moreover and contrary to many precedent results in the literature, it appears that an increase in natural resource dependence wipes out the positive effect of institutional quality on growth. Indeed, a positive variation of the quality of institutions does not necessarily lead to a positive variation in economic growth.

Suggested Citation

  • Yacine Belarbi & Lylia Sami & Saïd Souam, 2016. "The effects of institutions and natural resources in heterogeneous growth regimes," Middle East Development Journal, Taylor & Francis Journals, vol. 8(2), pages 248-265, July.
  • Handle: RePEc:taf:rmdjxx:v:8:y:2016:i:2:p:248-265
    DOI: 10.1080/17938120.2016.1225454
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    2. Santos Bila & Mduduzi Biyase & Matias Farahane & Thomas Udimal, 2023. "Foreign Aid And Economic Growth In Sub-Saharan African Countries," Economics Working Papers edwrg-03-2023, College of Business and Economics, University of Johannesburg, South Africa, revised 2023.
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    4. Puruweti Siyakiya, 2017. "The Impact of Institutional Quality on Economic Performance: An Empirical Study of European Union 28 and Prospective Member Countries," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 3(2), pages 3-24, December.

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