An empirical note on comparison between resource abundance and resource dependence in resource abundant countries

Abstract

This study explores the relative effects of natural resource abundance and natural resource dependence on economic growth for the period of 1980–2015 in 35 natural resource abundant countries. For this purpose, the relationship between economic growth, natural resource rents per capita, natural resource rents share of gross domestic product, capital, trade openness and financial development is examined. In doing so, we utilized with second generation panel data methodologies to take into account the cross-sectional dependence among countries. Our results show the existence of cointegration between the variables. Moreover, natural resource abundance promotes economic growth but natural resource dependence prevents economic activity. This study provides guidelines to utilise natural resources as economic tool to maintain economic development for longer period of time.