Natural Resources Abundance and Human Well-Being: the Role of Institutional Quality

This article examines the association between institutional quality, natural resources and multidimensional well-being in Saudi Arabia from 1990 to 2021, filling a notable gap in the existing literature on the linkage between human well-being and natural resources in a country with significant global energy influence. By integrating Sen's capabilities approach and constructing comprehensive indices of human well-being, including quality of life (QL) and standard of living (SL), this study specifically investigates the direct effects of natural resources wealth on these two indices and emphasizes the role of institutional quality as a transmission channel. The results show that natural resources, particularly total natural resource rents and oil rents, have positive direct effects on QL and SL, suggesting that effective resource management can enhance human well-being and economic prosperity. Furthermore, institutional quality plays a key role in shaping this relationship, with factors such as institutional quality index, government stability, and law and order having net positive effects on QL and SL. The study also identifies critical thresholds for controlling corruption, beyond which the positive effects of natural resource rents on QL and SL become more pronounced. These results highlight the importance of accountable and strong institutions to ensure equitable distribution of benefits from natural resources for human well-being.