Institutional Quality and the Transformation of Resource Rents into Economic Growth: Evidence from Resource-Rich Countries

Abstract

This study addresses the function of organizational quality in dealing the correlation between resource rentals and economic improvement in resource-rich countries through the period 1996–2024. Economic development is considered not only by the scale of resource rentals but owing to the stage of institutional standard to mange to achieve these means and direct them toward industrious actions. To attain this objective, the study engages a stable panel dataset which convers 27 resource-rich nations for a period 1996–2024, involving a total of 783 to be observed. Organizational quality is assessed via through a composite index built through Principal Component Analysis (PCA) reliant on the World Governance Indicators established by the World Bank. This study employs second-generation sort of panel unit root and cointegration tests, and the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) and Common Correlated Effects Mean Group (CCEMG) estimators. Additionally a Panel Threshold Regression model is used to analyse the nonlinear nature of the connection among the set variables.
The findings displays the presence of a long-run symmetry correlation in the study variables. The findings again show both resource rents and organizational attributes utilize a positive impact on economic expansion. The threshold analysis also show two crucial stages of organizational. Resource rents indicates a negative impact with a relatively weak organizational domains. These outcomes suggest that organizations not only impact economic expansion directly but also regulate the capacity of resource-inclined nations to change resource rents through sustainable economic development. The study exhibits the essence of organizational change and enhanced leadership as vital basics for exploiting the developing gains of natural properties.