Natural resource rents and sustainable development in MENA Economies: An empirical study

Climate change and its effects around the globe are demanding sustainable development, which encompasses socio-economic development along with taking into account the environmental aspect. The Middle East and North African economies (MENA) possess substantial reserves of natural resources. These natural resources played an important role in the development of this region, and studies are scarce in this regard for this region. Therefore, this study investigates the impact of natural resource rents on sustainable development in MENA. This study used the Sustainable Development Index, which incorporates socio-economic and environmental aspects. Thus, this study is different from other studies in this regard in the MENA region. Additionally, this study also considered other vital factors of sustainable development highlighted in the literature. These factors are renewable energy (REC), non-renewable energy (NREC), and trade openness (TRADE). This is a panel study; thus, a cross-sectional dependence test is carried out, which indicates that second-generation unit root tests have to be used for unit root problems. Likewise, the Westerlund cointegration test is used for examining panel cointegration between variables. Panel autoregressive distributed lagged (PARDL) technique is carried out for long- and short-run effects of explanatory variables on sustainable development. The results indicate that natural resource rents (TNR) have a negative impact on sustainable development, while REC, NREC, and TRADE positively influence sustainable development in the long run.