Can the resource curse be reversed through financialization, human capital, and institutional quality? Evidence from Sustainable Development Index

Abstract

In contrast to traditional research, this study uses the sustainable development index rather than economic growth to investigate the viability of the natural resource curse theory. It also assesses how effectively human capital, institutional quality, and financial development may be employed to mitigate the possible negative consequences of natural resource rent if the curse is likely to be real. For the period 1990 to 2019 and for 23 nations at risk of resource curse, this article examines the impacts of natural resource rent, the human capital index, institutional quality, financial development, and trade openness on the sustainable development index. The study's conclusions imply that sustainable development is equally subject to the resource curse. On the other hand, improvements in the measures of institutional quality, financial development, and human capital have helped to mitigate the negative effects of resource rent. It has been shown that human capital is the most productive of all these elements.