The nexus between natural resource rents and financial wealth on economic recovery: Evidence from European Union economies

Abstract

Natural resources are essential economic assets contributing significantly to employment creation, economic development, and improved living conditions worldwide. Most empirical studies from 2020 have attempted to fill these knowledge gaps. This study employs panel data techniques such as panel cross-section dependency, slope coefficient heterogeneity, and cointegration estimators to accomplish the stated goals. These estimators claim that the slope is heterogeneous and that there is cross-section dependency and genuine cointegration between the variables. This study suggests that political, financial, and economic concerns contribute to the volatility of natural resources in the European Union (EU). Natural resource volatility in the EU results from the economic and financial risks at each of the three runs. However, the volatility of natural resources has only a medium-to long-term effect on financial wealth. Natural resource volatility is not caused by renewable energy development in the near term. This study proposes that the EU sets responsible resource management standards to promote sustainable development.