Natural resources volatility and inclusive growth in MENA: Can financial development and governance dampen the curse? 1
Year: 2026
Type: article
Abstract: Recent volatility in natural resources has prompted research on their impact on economic performance, primarily focusing on economic growth expansion rather than on the equitable distribution of this growth, known as inclusive growth (IG). Even in studies that address the impact of volatility on economic growth, the Middle East and North Africa (MENA) region remains significantly overlooked. This study aims to address this gap by examining the direct impact of natural resource volatility (NRV) on IG as well as the moderating effects of financial development (FD) and institutional quality (IQ) across 18 MENA countries from 2002 to 2021. The empirical results based on the two-step system generalized method of moment (GMM) estimation reveal that NRV consistently has a direct negative impact on IG across different specifications. FD also exhibits a direct negative impact, while IQ has a positive yet insignificant impact. When considering the moderating impact, the findings indicate that FD and IQ positively moderate the effect of volatility on IG; higher levels of FD and IQ lessen the negative impact of volatility on IG. In addition, a net negative impact for resources volatility is reported until thresholds of 103% (on a scale of 1.266–138.42%) for FD and 2.48 for IQ (on a scale of −4.709 to 3.942). These thresholds imply that mature financial systems and institutional frameworks are necessary to counterbalance the NRV curse on IG in the MENA region. Policy implications are provided to guide future strategies.
Source: Cogent Economics & Finance
Institutions: Beni-Suef University, King Saud University, Cairo University
Language: English
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,165
OpenAlex ID: W7152091908