Natural resource dependency, institutional quality and human capital development in Gulf Countries

Abstract

This study analyses the social aspects of the natural resource dependency and institutional quality in the Gulf Countries by taking human capital as the dependent variable. The cointegration and error correction model has been applied based on the autoregressive distributed lag (ARDL) approach by using the time-series data from 1984 to 2014. The study uses the natural resource rents as a percentage of GDP as a proxy of natural resource dependency and corruption as a proxy of institutional quality. The results of the co-integration show that the natural resource dependency dampens human capital in Kuwait, UAE and the Kingdom of Saudi Arabia, and that corruption shows a significant negative impact on human capital in Kuwait and the Kingdom of Saudi Arabia in the long-term.