Reinvestigating the Impact of Natural Resource Rents on Carbon Emissions: Novel Insights from Geopolitical Risks and Economic Complexity

Abstract

Understanding the relationship between natural resource rents and carbon emissions is crucial for balancing economic development and environmental sustainability. This study reinvestigates the impact of natural resource rents on carbon emissions and explores the threshold effects of geopolitical risks and economic complexity, aiming to provide a more comprehensive understanding of the relationship between natural resource rents and carbon emissions. Based on an empirical analysis of panel data from 38 countries between 1995 and 2021, the conclusions are as follows. (i) The panel ARDL estimation results reveal that natural resource rents increase carbon emissions in the long run. Moreover, the result remains valid after addressing endogeneity. (ii) DPTR model results indicate that natural resource rents have a non-linear impact on carbon emissions under the influence of geopolitical risks and economic complexity. As geopolitical risks escalate, the impact of resource rents on carbon emissions changes from reducing to increasing. On the contrary, the escalation of economic complexity transforms the effect of natural resource rents on carbon emissions into a reducing effect. (iii) Heterogeneity analysis results demonstrate that only the impact of oil and natural gas rents on carbon emissions is significantly affected by high geopolitical risks. In addition, in the case of high economic complexity, oil, natural gas and forest rents are beneficial in reducing carbon emissions, while coal and mineral rents have a negative impact. Finally, policy implications for global resource management and environmental sustainability that combine geopolitical risk and economic complexity are proposed.