Revisiting resources allocation for slow-moving economies: A way forward for low-income economies

Abstract

There is an excess of studies considering the sustainable usage of natural resource rents and economic growth nexus in developed and emerging economies. However, sustainable natural resources-economic growth nexus with environmental factors in low-income economies are lacking. This study contributes to the literature by examining the impact of natural resources (oil and natural gas rents), carbon emissions, and renewable electricity on the economic growth of low-income economies from 1984 to 2021. The study used simplified time series data methods such as unit root tests and a novel MMQR approach. The empirical findings indicate a divided effect of natural resources; oil rents decrease economic growth, while natural gas helps improve low-income economies' economic growth. Furthermore, carbon emissions increased during the period because of the resource curse in the economy and the inefficient extraction of natural resources. Renewable electricity is also found to have a negative and significant impact on economic growth because of the hindrance of shifting the economy towards renewable energy from non-renewable energy. Moreover, the bi-directional causal association is found with the economic performance of low-income economies. Based on the study's empirical findings, the paper offers various policy implications for the policy makers in the situation of low-income economies.