Aggregate and disaggregate impact of natural resources on economic performance: Role of green growth and human capital

Abstract

A curse or blessing, natural resources remains a dilemma with diverse findings for both developed and developing economies. However, the disaggregated and aggregated impacts of natural resources have not yet been unearthed for high-income economies, i.e., the G-7 economies. This study is hence aimed to explore the aggregated and disaggregated impacts of natural resources on economic growth and the controlling role of carbon emissions, human capital, and green growth from 1990 to 2020. To obtain the coefficients of the selected regressors, the novel Method of Moments Quantile Regression (MMQR) approach is employed. From the empirical estimations, it is concluded that the availability of aggregated and disaggregated natural resource is negatively intertwined with economic development among the G-7 nations, thereby validating the existence of the “resource curse” hypothesis at both aggregated and disaggregated levels. This outcome is consequential and calls for immediate attention from the high authorities in the G-7 region. The member nations should work cooperatively to establish a stable regional market that can absorb the price volatility of natural resources and control the demand and supply mismatch of energy and related natural resources, which will help to attain steady-state economic growth. Additionally, the mining cost and mining-induced environmental costs need to be minimized through technological forwardness and scientific mining. The findings also unveil that green growth reduces economic development among the G-7 nations. This is justified, given that green growth requires more dependence on clean energy sources, which means less extraction and consumption of fossil fuels. Moreover, human capital development and CO2 emissions are boon for economic amelioration among the panel nations; however, CO2 emissions-induced development is highly discouraged considering the G-7 nation's green growth directory. However, it is speculated that the green growth agenda may exacerbate the region's resource curse dilemma. Therefore, the G-7 nations should cautiously estimate the trade-offs between green growth and a natural resource-induced curse.