Role of mineral-based industrialization in promoting economic growth: Implications for achieving environmental sustainability through financial management

Abstract

Industrialization based on mineral resources has historically been pivotal in driving many countries' economic development and growth. This study emphasizes the need to understand the intricate link between mineral-driven economic development and ecological responsibility. The present study utilized annual data from 1990 to 2022 and employed the Johanson approach to experimentally evaluate the impact of mineral-based industrialization on economic growth in the context of Canada. Johnson Cointegration analysis and the dynamic error corrections model confirmed long-run and short-run relationships among economic growth, and other independent variables (financial management, technological innovation, energy use, mineral rent, abundance of natural resources). In the long run abundance of natural resources shows a negative impact on economic growth by (−0.02) highlighting the validation of the environmental resource curse hypothesis. The coefficient of financial management indicates 1% increase in financial management will result in an improvement in economic growth of 0.11%. Mineral rent shows a positive and significant relationship with economic growth. Moreover, estimates of technological advancement show that a 1% increase in technological advancement will result in economic growth of 1.12%. The study further suggests that policymakers should diversify the economy by investing in the non-mineral sector and promoting innovation to reduce reliance on resource-dependent revenue. Lastly, funds must be allocated to educational and training initiatives to provide local laborers with the cutting-edge expertise required for mineral processing.