Corruption, rentier states and economic growth: Where do the GCC Countries stand?

Countries with vast natural resources usually display low economic outcomes and corruption is always considered as a main economic hinderer in this regard. We consider in this study the Gulf Cooperation Countries as endowed with huge natural resources while considering the potential role of corruption on their economic growth. We first theoretically discuss both the cursing and the blessing effect of natural resources on countries’ economic outcomes. The empirical analysis employed the panel GMM approach to explore whether and how the investment channel and the political stability channel can contribute to explaining the link between corruption and economic growth. Estimation outcomes show that overall corruption negatively impacts economic growth. Given that usually, corruption occurs through the interaction of the business with the public sector, regulatory authorities, as well as policymakers should spend their efforts to improve the transparency of communication between firms and public entities and officials. The result is expected to reduce their discretionary power, as well as the expected gains from corruption. Overall, these countries need to adopt certain institutional reforms, leading to higher accountability, the strength of property rights, and better bureaucratic quality