Investigating the Impact of Natural Resource Rents and Good Governance on the Welfare of Developing Countries: The Welfare Curse Phenomenon and the Quantile Regression Approach

Monitoring and evaluating social welfare is one of the most important issues for policymakers in many countries, including developing countries. The purpose of this study is to investigate the impact of natural resource rents and good governance on the welfare of developing countries. To achieve the purpose of the study, from the econometric method of quantile panel data with fixed effects, the relationships of variables in different quantiles during the period 2007-2018 have been estimated. The results showed that the effect of natural resource rents on welfare in all quantiles is negative and significant so this effect is more pronounced in developing countries with low welfare. In other words, the existence of the phenomenon of the welfare curse in developing countries is confirmed. The results also showed that the effect of good governance in different quantiles is positive and significant. So good governance can increase prosperity in developing countries. Also, according to the results, other variables such as Urban population, employment rate, and environmental performance index in different quantiles have a positive and significant effect on welfare. In addition, the effect of gross capital formation on welfare is positive and significant In all quantiles except the fifth and sixth quantiles.