Resource curse hypothesis and sustainable development: Evaluating the role of renewable energy and R&D

Abstract

Whether natural resources are a curse or a blessing is still a burning issue among policy-makers and scholars. Therefore, this study revisited whether natural resources (TNRRS) play a role in the developed economies' sustainable development, specifically in the Group of Seven (G7) countries. Covering the extended period from 1990 to 2020, this research also uncovers the impact of renewable energy usage, research and development (R&D), and gross fixed capital formation in the region's sustainable development. Utilizing advanced panel data specifications such as slope heterogeneity, cross-section dependence, second-generation unit root test, and the error correction cointegration approach, this study validates the stationarity of the variables and the long-run association between the variables valid. Due to the non-linear data distribution fact, this study uses the novel Method of Moment Quantile Regression, which indicates that TNRRS is a blessing for the G7 economies as it encourages the region's economic progress. Also, the gross fixed capital formation is encouragingly related to the region's sustainable development. In contrast, this study found that renewable energy use and R&D investment adversely affect the region's sustainable development. The estimated results are robust, as validated by the quantile regression. Between the variables, the bidirectional causal association exists. Based on the empirical observations, this study recommends the efficient utilization of natural resources, channelizing renewable in the industrial sector, and enhancing investment in the research and development sector to attain sustainable development in the region.