Abstract
Amid global hydrocarbon dependence and the growing challenges of the energy transition, issues of economic diversification and institutional quality are becoming crucial for the sustainable development of oil-exporting countries. This study aims to estimate the impact of economic diversification on GDP growth in ten oil-exporting countries over the period 1990–2023, accounting for the moderating role of institutional quality. Using panel data for Canada, Iraq, Kazakhstan, Kuwait, Nigeria, Norway, Russia, Saudi Arabia, the United Arab Emirates, and the United States, the analysis employs fixed-effects models and dynamic systemic GMMs to address endogeneity. The results show that an increase in the diversification index by one standard deviation (0.168) increases GDP growth by 0.75 percentage points, with the effect being 2.4 times higher in countries with strong institutions than in countries with weak institutions. A threshold level of oil dependence was identified at 25% of GDP, above which the negative consequences of the "resource curse" begin to predominate. A time-lapse analysis revealed an increase in the diversification effect over time: from 2.134 in the 1990s to 5.234 in 2020–2023, highlighting its growing importance in the context of the global energy transition. A decomposition of the effects shows that a reduction in macroeconomic volatility accounts for 35.2% of the total effect, technological externalities for 28.7%, human capital development for 21.3%, and institutional improvements for 14.8%. These results underscore the need to combine economic reforms with institutional transformation to overcome resource dependence and ensure sustainable economic growth.