The drivers of sustainable development: Natural resources extraction and education for low-middle- and high-income countries

Abstract

The primary goal of all developed and developing nations is the attainment of sustainable development via employing the available resources, such as natural resources. Also, economies have increased their educational expenditure to improve overall human capital and technical education. This study tends to discover the drivers of sustainable development by analyzing the influence of natural resources such as mineral rents, oil rents, coal rents, and educational expenditures on the economic expansion of the low, middle, and high-income economies during 1988–2021. Since the panel data exhibits the slope heterogeneity and cross-sectional dependence. Therefore, the second-generation CIPS unit root test is used, which reports mixed order of integration. In this regard, the present study utilizes the third-generation “cross-section augmented autoregressive distributed lag” approach and finds that natural resources (mineral, oil, coal) are adversely and significantly affecting the sustainability of the economy in both the short and long-run. On the other hand, the results asserted that educational expenditure significantly improves economic growth in both terms. However, the error correction term (-0.671) indicates that the equilibrium level can be achieved in the long-run with a 67.1% speed of adjustment. Further, the results suggest a bidirectional causal connection between the stated variables. Based on the empirical outcomes, this study suggests further investment in education, human capital, and research and development.