On the conflict of natural resources hypothesis in Pakistan

Abstract

Being a resource-based nation, Pakistan has been riddled with economic inadequacy attributable to its reliance on the resource industry. The conformity of natural resources to a curse or blessing cannot be ascertained merely from the perceptive of the influences of resource endowments on economic and social development, as the focus of previous studies proposed. This inquiry intentions are to scrutinize the nature of natural resources, government debt, trade globalization, government stability, and renewable energy consumption, as well as their implications for human development in Pakistan from 1990 to 2021, applying the novel dynamic autoregressive distributed lag (D-ARDL) simulations method and the frequency-domain causality (FDC) test to scrutinize long-, medium-, and short-run relationships. The observed results proposed that natural resource undesirably impact human development, confirming the existence of a resource curse effect. Simultaneously, government debt and government stability worsen, whilst renewables and trade globalization stimulate human development in long and short term. In addition, the FDC validates long, medium and short run causation hypotheses. The findings indicate an appropriate practice for the optimal use of resource rents in conjunction with lower public debt and a stable government system would culminate in human development and inclusive growth.