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Empirical studies imply that natural resource abundance plays an important role on economic growth in natural-resource-rich countries. The growth literature shows that human capital, education, technology progress and institutional quality are effective factors on economic growth. This article using a panel data firstly investigates the Resource Curse Hypothesis and then analyzes the effective factors and how they affect RCH. Among several effective factors that are reported in present studies, in this paper the main focus is on Human Capital and Institutional Quality. The sample for this research is two groups of petroleum exporting countries: A) Major petroleum exporters and B) Other petroleum exporters which are analyzed for the period 1996-2006. Results show that Resource Curse is seen in major Petroleum Exporting Countries. The findings also confirm the importance of low institutional quality and inadequate investments in human capital in case of resource curse. The results confirm that natural resource abundance has a negative impact on growth if considered in isolation, but a positive direct impact on growth if other explanatory variables, such as human capital, institutional quality, openness and etc. are taken into account.

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Intervening government and performing environmental policies are among solutions for reducing production externalities and achieving sustainable development. Indeed, institutional quality is an effective factor in selecting optimal environment policies. This paper tries to identify optimal environmental policy among common public tools for intervening (pollution taxes and permits) in the presence of environmental and economic uncertainties with various institutional quality degrees. In this paper, institutional quality is included in a dynamic stochastic general equilibrium model and its effect on choosing environmental policy is considered. The results showed that pollution permit is preferred to taxation on pollution with various institutional quality degrees. In addition, with improvement in institutional quality, if only shock is an environmental shocks, then taxation on pollution will be an optimal policy.

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The interaction between institutional quality and the mechanism of oil shock diffusion might have a significant effect on macroeconomic dynamics in an oil-exporting country. The literature lacks a formal model to address the role of institutional quality in the economic performance of an oil-rich developing economy. Using a new Keynesian dynamic stochastic general equilibrium (DSGE) framework, this study develops a model to investigate the response of macroeconomic variables to changes in institutional quality resulted from oil shocks in Iran as an important oil-exporting country. Our modeling allows us to show how institutional quality and oil revenues affect households, firms, government, and the central bank. The model is solved and calibrated for the period 1959-2017. The results indicate that the destruction of institutional quality caused by a positive oil shock prevents the Iranian economy from reaping the fruits of an increase in oil revenues. Oil revenues and their shocks by destroying the institutional quality through the expansion of rent-seeking ‎activities, increasing transaction costs of production, reducing the impact of government spending, and ‎diverting monetary and fiscal policies from the targets result in negative effects on Iran's non-oil ‎production in the long run.‎ To reduce the destructive effects of oil shocks on institutional quality in the Iranian economy, we suggest the policymakers in Iran reduce the dependency of the government budget on oil revenues.