Resource curse or resource blessing: Perspective on the nonlinear and regional relationships in China

Abstract

This study utilizes the system generalized method of moments (SYS-GMM) model to measure the impact of resource dependence on economic development on the panel data of 236 prefecture-level cities in China from 2005 to 2018 and finds a complex nonlinear “M"-shaped trend, indicating that some regions enjoy “resource blessing”, while others suffer “resource curse”. A series of robustness tests show that the “M"-shaped trend holds. Heterogeneity analysis reveals that “resource blessings” benefit growing resource-based cities, while the “resource curses” trap declining resource-based cities in a dilemma. In addition, resource dependence has a significantly negative spillover effect on economic development in the short run and a positive total effect in the long run. Resource dependence imposes a negative effect on economic development by inhibiting the upgrading of industrial structure and crowding out R&D, while the continuous rise of human capital accumulation is an important channel to break the “resource curse".