Natural resources led innovation: Employing structural break approach to explore USA's natural resources sector

Abstract

A plethora of studies exist on the nexus of natural resources and economic expansion; however, the findings are subjective, and therefore, limited studies are available in the US based on the linkage of natural resources and technology via considering structural breaks. The study covers the different gaps in the literature by providing an understanding of whether the NRR fosters innovation or impedes it in the USA. Hence, this study evaluates the linkage of natural resource rents, including mineral rents, oil rents, coal rents, forest rents, and natural gas rents, and technological innovation in the USA from 1980 to 2021. The study also incorporated the role of economic growth as a controlling variable. The study employed ADF and Bayer-Hanck test for unit roots and long-term cointegration. The least squares method is employed as the primary method and for robustness check analysis, the frequency domain causality approach is utilized. The results validate variables are found stationary at difference D (1) and long-term cointegration has been confirmed in the variables. The findings deliberate that natural resource rents have the existence of a resource curse on technological innovation except for mineral rents which are significant even with the inclusion and exclusion of oil and coal rents. The study further concluded that economic growth stimulates technological innovation in the USA. The outcomes of robustness check analysis via frequency domain causality approaches provide similar results and indicate bi-directional causality among variables. It is concluded that natural resources should be diversified and break its cluster of monopolistic rents to sustainable development and foster innovation in the US.