Governance, natural resources rent, and infrastructure development: Evidence from the Middle East and North Africa

Author's Department

Public Policy & Administration Department

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Hamid E. Ali, Shahjahan Bhuiyan

Document Type

Research Article

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This article identifies the role governance plays in developing physical infrastructure through the utilization of natural resource rent as public investment for infrastructure development in the Middle East and North Africa (MENA) region. The empirical model employs panel data from 15 MENA countries and two governance indices (GOVI)—GOVI Principal Component Analysis (PCA) and GOVI (Additive). Using the Granger Causality test, a one-time lag was applied to minimize endogeneity concerns. The article introduces the panel unit roots, and panel Granger noncausality is used for testing stationarity and causal relationships. Estimates of both specifications suggest that improving the quality of governance leads to a significant positive effect on physical infrastructure development in the MENA region. The study departs from the traditional natural resource rent curse arguments and moves toward natural resources rent and good governance indicators for infrastructure development. The findings show that natural resources rent and governance do matter for infrastructure development. This article offers new theoretical and empirical insight in the context of the MENA region.

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