Abstract
The discovery of extractive resources is associated with multiple opportunities and unbridled optimism on achieving socio-economic development for many countries. However, the question how the host governments meet expectations of indigenous people by ensuring an ideal resource-based economic sustainability (RES) has been receiving less research attention. Using the global panel dataset of 80 resource-endowed economies from 2010 to 2017, we postulate and empirically examine the mediating effect of the resource governance (RESOGV) on the relationship between institutional quality (IQ) and RES. The ANOVA and post hoc ANOVA results revealed significant disparities in terms of IQ, RESOGV, and RES among countries with different levels of economic development, regions, and sector (mining or petroleum). Moreover, the fixed effects (FE) and ordinary least square (OLS) results confirmed that IQ marginally influenced RES. However, the influence was more pronounced when it was partially (but complementarily) mediated by the RESOGV. The paper, therefore, stresses the importance of host governments in improving the quality of their institutions. This will ultimately help enhancing their RESOGV capabilities for attaining economic, social and environmental sustainability.
Highlights
Natural resource endowments in hosting economies are intricately linked with multiple opportunities and unbridled optimism on advent socio-economic development (Van der Ploeg 2011)
We argue that the contribution of institutional quality (IQ) in steering resource-based economic sustainability becomes much pronounced when interceded by resource governance
Natural resource endowment provides an opportunity for a country to leapfrog to higher socio-economic development
Summary
Natural resource endowments in hosting economies are intricately linked with multiple opportunities and unbridled optimism on advent socio-economic development (Van der Ploeg 2011). Extant literature shows that while some economies significantly benefit from their resource endowments, others experience the resource curse (Kirshner and Power 2015). Countries such as Norway and Botswana exemplify the fact that natural resources endowment can be a blessing by fueling economic growth and improving the living standards (Abdo 2014; Stiglitz 2004). The ideal resource-based economic sustainability can be realized when the hosting economies meet the expectations of indigenous people with the socio-economic benefits derived from the extraction of resources (Apergis and Payne 2014)
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