Impact of Natural Resources and Institutional Quality on Economic Growth in GCC Countries

Said Zamin Shah, Muhammad Faheem, Fatima Farooq and Saima Aslam

Sustainable Business and Society in Emerging Economies, 2024, vol. 6, issue 4, 523-536

Abstract: Purpose: This study examines the economic growth dynamics of Gulf Cooperation Council (GCC) economies from 2001 to 2023, focusing on the roles of natural resources, institutional quality, human capital, and macroeconomic stability.Design/Methodology/Approach: The research employs the Pooled Mean Group (PMG) estimation method to analyze the short- and long-term impacts of various factors on economic growth within the GCC region.Findings: The results reveal that natural resources provide short-term economic benefits but hinder long-term growth, highlighting the need for diversification away from resource dependence. In contrast, improvements in institutional quality and investments in human capital have significant positive effects on long-term economic growth and stability. Exchange rate fluctuations are found to negatively impact economic growth in both the short and long run, emphasizing the importance of macroeconomic stability.Implications/Originality/Value: The findings suggest that GCC countries should focus on reducing their reliance on natural resources by diversifying into sectors such as technology, finance, and renewable energy. Strengthening institutional frameworks through regulatory and governance reforms, coupled with investments in education and innovation, will further enhance economic resilience. Additionally, ensuring exchange rate stability and fiscal sustainability, along with fostering entrepreneurship and regional economic integration, is crucial for maintaining long-term growth. This study provides valuable policy recommendations aimed at achieving sustainable economic development in the GCC region, urging a balanced approach to resource management, institutional improvements, and macroeconomic stability.&

Keywords: Natural Resources; Institutional Quality; Human Capital; Exchange Rate Fluctuations; Economic Growth (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:src:sbseec:v:6:y:2024:i:4:p:523-536

DOI: 10.26710/sbsee.v6i4.3180

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