Abstract
This paper examines the relationships between natural resource dependence, public education investment, and human capital accumulation. It addresses why the “blessing” of abundant natural resources often turns into a “curse” in many countries and regions, focusing on the crowding-out effect of natural resources on human capital. According to our empirical analysis of provincial panel data from China, natural resource dependence is significantly and negatively correlated with human capital accumulation. The crowding-out effect of natural resources on human capital exists only in the central and western regions of China. Our introduction of an interaction term for natural resource dependence and public education investment underscores the possibility of investing in public education to reduce the crowding-out effect of natural resource dependence on human capital. The government should utilize the income of the natural resource sector to increase investment in education to enhance local human capital.
Highlights
Natural resources constitute an important material basis for national economic development and social progress
This paper examines the relationships between natural resource dependence, public education investment, and human capital accumulation
In the central and western regions, natural resource dependence would have a positive impact on human capital accumulation if public education investment accounted for 6.97% of the gross domestic product (GDP), but the actual investment in public education in these regions accounted for only 3.7% of the GDP
Summary
Natural resources constitute an important material basis for national economic development and social progress. The effect of natural resource dependence on human capital accumulation has been extensively explored, it remains unknown whether this effect is positive or negative. Some recent studies reported a crowding-out effect of natural resource dependence on human capital, they do not explore how to reduce or avoid this effect. To this end, we analyze the data from the perspective of investing in public education. An analysis of the impact of public education investment on the relationship between natural resource dependence and human capital accumulation may contribute to the development of public policy
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