The Effect of Rent Leverage on Deepening the Impact of Institutional Inefficiency on Resource Curse: The SFA Approach

This paper attempts to investigate the relationship between institutions and the resource curse in selected Middle East and North African countries, considering the central role of rent leverage on deepening the effect of institutional ineffectiveness on resource curse. There are various approaches to explain and investigate the resource curse, so that the research literature on this subject is widespread and expansive. Meanwhile, the institutional analysis approach has the advantage of being comprehensive and capable of providing comparisons among the cases under study, which is why the present study benefits from this approach. Quantitative methodology of the study is based on Stochastic Frontier Analysis (SFA). The findings reveal that, besides the role of institutions in the emergence of resource curse in the selected countries, a high percentage of inefficiency is due to the continued weakness of the institutions, because of rent leverage. Hence, these countries need institutional reforms in order to increase the efficiency and to get rid of the resource curse.