Natural Resource Dependence Research Articles

Investigating an optimal resource dependency to prevent natural resource curse: Evidence from countries with the curse risk

The aim of this research is to find the optimal level of resource dependence that will eliminate the possibility of natural resource curse in 28 countries. First, the validity of a potential inverted U-shaped relationship between natural resource dependence and economic growth is explored, followed by the computation of the optimum dependency level that maximizes economic growth. A second empirical model is also developed to compare the optimal levels of resource dependence for economic growth and sustainable development. In doing so, second generation panel data methods are used, which account for the cross-sectional dependence of the 1990–2017 period. Furthermore, the impact of factors such as human resources, trade openness, and institutional efficiency, which are thought to mitigate resource risk, are studied. Our findings show that current resource dependency level does not appear to be a barrier to economic growth in 17 of the 28 countries, but it does appear to be a curse for sustainable development in 9 of 17 countries as well as the other 11 countries. Furthermore, it is concluded that increased trade openness promotes economic growth while harming sustainable development.

Tracking environmental sustainability pathways in Africa: Do natural resource dependence, renewable energy, and technological innovations amplify or reduce the pollution noises?

The global economy is experiencing the most challenging era of climate change beyond what is evident in the pre-industrial age. Although Africa's share of global greenhouse gas (GHG) is minimal, the ensuing effects hit hard on the continent. Hence, the present study provides the first comprehensive empirical assessment of environmental sustainability in Africa within the novel STIRPAT framework. This study critically examines the impacts of natural resource dependence, renewable energy, urbanization, technological innovations, and structural transition on environmental pollution proxied by carbon emissions, ecological footprint, and PM2.5 air pollution from 1990 to 2019 in five top carbon-emitting African countries. The empirical evidence is based on advanced panel estimators comprising CS-ARDL, CCEMG, and AMG robust to cross-sectional dependence (CSD). The quantile regression efficient for exploring the conditional distribution effects is equally employed alongside Dumitrescu-Hurlin panel granger causality test. The preliminary tests reveal the presence of CSD and heterogeneity of the series, which led to the conduct of second-generation unit root and cointegration tests. The main empirical results show that renewable energy, technological innovations, and structural transition reduce environmental pollutants from surging based on the observable negative signs. By implication, these indicators support Africa's path to environmental sustainability. On the flip side, resource dependence and urbanization amplify the surge. The feedbacks from quantile regression provide sturdy support for the main estimators. The granger causality feedbacks support the existence of bidirectional and unidirectional causality among the variables. Based on the findings, policies that promote sustainable environment are formulated.

How does resource dependence relate cities' technology diversification? The role of density and complexity

This study investigates the relationship between resource dependence and technology diversification with a territorial perspective, considering heterogeneity of different technologies, based on the patent application data of 641 categories in 341 cities in China. Using a linear probability model with fixed effects, the result shows that regional natural resources dependence is negatively related to the probability of diversifying into new technologies and the growth of a technology, providing evidence of “resource curse”. However, the probability of diversifying into less related and more complex technology spaces is less likely to be hindered by reliance on natural resources. Cities with higher complex knowledge structure are inclined to develop new technologies, and also experience a less negative effect of resource dependence on the probability of entering new technology space. Moreover, for technologies of different position in a city, reliance on natural resource also affects their growth distinctively. This study provides significant policy implications for the development of resource-dependent cities and the transformation of old industrial regions. Governments can manage existing resources to make a strategy and develop technical fields that have higher complexity or lower relatedness, which is vital to convert resource curse to resource blessing, thereby improving the sustainability and productivity of resource use.

Natural resource dependence and institutional quality: Evidence from Sub-Saharan Africa

Recent development in the resource curse literature highlights that one of the channels through which the curse may occur is the tendency of resource wealth to weaken institutional quality. Using an intermediary framework, this study examines whether natural resource dependence weakens institutional quality in sub-Saharan Africa (SSA) using the system dynamic general methods of moments. The results indicate that natural resource dependence is negatively associated with institutional quality. From this perspective, the study concludes that natural resource dependence weakens institutional quality in SSA which provides empirical support for the rent-seeking theory. In addition, employment, education, and FDI exhibit positive significant relationships with institutional quality. In light of this, the study recommends that policy development in SSA countries should encourage modernisation and diversification of their economies from natural resource dependence to enhance the growth of other sectors. Furthermore, policies on natural resources should incorporate sustainable exploitation to limit rent seeking and ensure the independence and quality of institutions to turn the resource curse into a blessing.

On the criticality of renewable energy to sustainable development: Do green financial development, technological innovation, and economic complexity matter for China?

The current era faces the devastating threats of global warming than what is evident in the pre-industrial age. Efforts toward resolving these environmental issues have heightened the calls for pro-green policy measures in which renewable energy and green finance stand out. Consequently, this study examines the impact of renewable energy, green finance, technological innovation, and economic complexity on sustainable development captured by sustainable economic growth and carbon neutrality in China. The empirical model endogenizes the role of natural resource dependence and human capital. The analysis is based on annual time series data from 1996 to 2018 estimated using autoregressive distributed lag (ARDL) model. The empirical results reveal that renewable energy (RE) and technological innovations (TECIN) are fundamental factors whose engagement is not negligible if the other indicators must provide desirable and consistent growth and environmental effects that support sustainable development. In particular, the essential roles of green finance on sustainable development are empirically confirmed for China. Interestingly, the robustness analyses conducted provided substantial backings for the main results. Practical policy implications leading to the sustenance of green finance, renewable energy, and technological innovation for driving sustainable development in the Chinese economy are formulated based on empirical results.

Natural resource dependence and economic growth in SSA: are there threshold effects?

ABSTRACT The debate on the natural resource curse hypothesis has attracted the attention of policy makers and policy analysts for the past few decades. However, the empirical findings on such a hypothesis have proven inconclusive. Our study investigates the threshold effects of natural resource dependence on economic growth in sub-Sahara Africa (SSA) using both aggregate and disaggregate data from 1990 to 2019 by employing a threshold effect model. The results indicate a double threshold effect of natural resource rent on economic growth. In particular, below 6% of GDP, aggregate natural resource rent exerts a significant negative effect on economic growth. However, as the rents increase above 6% to about 15% of GDP its negative effect on economic growth significantly reduces. In addition, beyond 15% of GDP natural resource rent exhibit a substantial significant positive impact on economic growth. Further, the disaggregated data reveal that forest rents exhibit a strong weighty adverse effect on economic growth at all levels of thresholds. The study recommends that governments within the sub-region need to put in policies to ensure that natural resources generate at least 15% of GDP annually to promote growth.

Research on the impact of the Belt and Road Initiative on the sustainability of the resource-based economy of participating countries.

As of December 2021, China has signed more than 200 cooperation documents on the Belt and Road Initiative (BRI) with 145 countries and 32 international organizations. The Belt and Road Initiative has exerted a considerable influence on the world. This research aims to explore the impact of the Belt and Road Initiative on the sustainable development of the resource-based economy of countries participating in the Belt and Road Initiative. Based on the panel data of 130 countries participating in the Belt and Road Initiative and 46 other countries from 2006 to 2019, the difference-in-difference (DID) model was used for empirical evaluation. After multiple robustness tests, the Belt and Road Initiative was found to negatively correlate with the economic dependence on the natural resources of BRI-participating countries, promoting sustainable economic growth. The heterogeneity test results show that BRI participating countries with low income and lower-middle income benefit more than countries with high income and higher-middle income. In comparison, the degree of impact has little correlation with whether they are countries along the Belt and Road. The results of the intermediary effect test show that the level of infrastructure, industrial upgrading, and technological progress has played an essential role in the process of BRI's influence on reducing natural resource dependence to promote the sustainable development of BRI participating countries.

Fossil fuel dependence and energy insecurity

BackgroundAccess to reliable energy services is increasingly seen as a prerequisite for well-being and human development. Copious research documents the negative consequences that occur when nations specialize in natural resource production, creating a “natural resource curse” or “paradox of plenty”. In this analysis, we evaluate how natural resource dependence, measured as oil and gas production, impacts energy security.ResultsUsing entropy-balanced fixed effects models, we find that oil and coal production is not associated with shorter times to establish a connection to the electricity grid, fewer outages, or improve electricity access among the population.ConclusionsNations that produce oil and coal do not seem to have better energy insecurity as a result, representing a distributional inequality. Fossil fuel-producing nations should consider implementing policies that would allow them to retain more wealth from fossil fuel production.

Natural Resource Dependence, Corruption, and Tax Revenue Mobilization

This paper explores the dynamic interactions between natural resource dependence, corruption, and tax revenue mobilization worldwide. The empirical analysis used a cross-section augmented autoregressive distributed lag (CS-ARDL) approach that accounts for time dynamics, cross-sectional heterogeneity, and cross-sectional dependence. The results show that the interaction between natural resource dependence, corruption, and tax revenue mobilization is complex and depends on the type of tax revenue. For example, reducing corruption stimulates non-resource tax revenue mobilization compared to total tax revenue; however, tax revenue mobilization is sometimes a source of corruption and evasion of natural resource rents. The results suggest that tax administration institutions need to be strengthened to limit predatory and rent-seeking behavior.

Sustainable development in the wine industry: The impact of the natural environment and gender‐diverse leadership

AbstractThere is a robust stream of research studying the external and internal drivers of cleaner production practices, yet little of this research has combined an examination of the natural environment and the demography of human agents. Building on natural resource dependence theory (NRDT), this study establishes that wine firms are highly dependent on nature (temperature, rainfall) and face uncertainties surrounding access to eco‐system services, which act as a driver of cleaner production practices. Further, because women leaders are more likely than their male counterparts to demonstrate sensitivity towards and respect for the natural environment and sustainable development, a hypothesis is put forth that gender‐diverse leadership shapes (moderates) the main effects relationships. By studying a sample of 1886 wine firms operating in Australia over the years 2004–2018, these relationships are tested and the hypotheses confirmed. The results are discussed, with implications for theory, empirical research, practice and policy.

Natural resources, technological progress, and ecological efficiency: Does financial deepening matter for G-20 economies?

This study examines the impact of natural resource dependence, technological progress, and financial deepening on ecological efficiency, mainly focusing on how the financial deepening moderates the influence of natural resource dependence and technological progress on ecological efficiency of 28 selected G-20 countries during 1985–2017. We employ a panel quantile regression (PQR) estimator to yield heterogeneous results across diversified levels of ecological efficiency for G-20 economies. The keystone findings are: Firstly, the bootstrap cointegration uncovers a long-run relationship among our study variables. Secondly, natural resource dependence and technological progress decelerate ecological efficiency for all quantiles. Thirdly, financial deepening decelerates the ecological efficiency for lower and middle quantiles while accelerating the same for the upper quantiles. Fourthly, financial deepening negatively moderates the influence of natural resource dependence and technological progress on the ecological efficiency for the lower and middle quantiles, while it positively moderates the same for the upper quantiles. Finally, a unidirectional causality originates from moderation terms to ecological efficiency, while all other variables establish a bidirectional causal linkage with ecological efficiency. Based on empirical results, policies are suggested.

Thriving in turbulent times: Livelihood resilience and vulnerability assessment of Bolivian Indigenous forest households

Climate change affects ecosystems and the well-being of rural households relying on ecosystem services for their livelihoods. The ability to withstand the adverse effects of climate change depends on their livelihood resilience. The relationship between natural resource dependence and livelihood resilience of Indigenous forest households in the Amazon region is still poorly understood. We used a case study approach to identify factors contributing to the livelihood resilience and vulnerability of 45 households in the Communal Land of Origin Tacana I area in the Bolivian Amazon. Household income data were collected before (2013) and after (2015) an extreme weather event. We combined a theoretical resilience framework with a practical indexing method to calculate the factors contributing to livelihood resilience and vulnerability. Additionally, conditions, regulatory and policy frameworks shaping vulnerability and resilience at the local level were reviewed. Our results show that income activity choice influences households’ livelihood resilience and vulnerability. Regarding natural resources, a low vulnerability was linked to selling game and fish or pursuing a wage livelihood strategy, while high resilience was related to hunting and cattle. Our results underline the importance of social networks and capital for low cash-income households to provide support. National development policies prioritize economic growth based on strengthening the energy, agro-livestock sector and boosting oil and mining sectors with industrialization. Some of these priorities may threaten the resilience and increase the vulnerability of Indigenous forest-dependent peoples and their subsistence livelihoods. External pressure on forest resources, including fish, requires a holistic focus on livelihood resilience in national adaptation strategies. Anchoring sustainable natural resources management and monitoring strategies at all policy and operative levels is crucial to the livelihood resilience of forest-dependent (Tacana) households and forest ecosystem health. Risk management approaches need to be developed inclusively and have an integrated socio-ecological focus to avoid adverse spill-over effects.

Influence of stock market factors on the natural resources dependence for environmental change: Evidence from China

The focus on sustainable development and a green perspective is increasing for minimizing the effects of resource depletion and pollution in the economies. China has been pushing green practices to remedy the damage to the environment it has contributed in the past. There is a direct association between the stock market trading activities and surplus of current accounts on the natural resources and green environmental practices. Thus, the present study was performed to study the relationship between the stock markets and natural resource dependency in China. This study extracted the data from the Statistical yearbook of China, World Banks, and Shanghai Stock Exchange from 1981 to 2020. The novel approach of the ARDL was used to study the long-run and short-run relationships between the stock market and the natural resource dependency of China. The data of the last four decades was employed to study the variation and association between the research variables. The ARDL bounds test informed of significant cointegration among the research variables. The estimation indicated direct associations between the stock market value traded and capitalization in the long-run and short-run. The stock market capitalization and value traded of the stocks in China represent significant affluence over the dependency on natural resources. This study presents a new vision for China to develop its economic and environmental policies.

Mexico at the crossroads of natural resource dependence and COP26 pledge: Does technological innovation help?

The nexus between natural resource depletion and environmental quality has been a heated topic of debate among policy experts in recent years. This nexus is crucial to achieve Sustainable Development Goal (SDG) 13 which deals with climate change mitigation. However, the extant literature has not paid due attention to this nexus, particularly in the case of Mexico. Against this backdrop, the present study examines the relationship between ecological footprint and natural resource depletion, economic growth, energy consumption, technological innovation, and foreign direct investment in the Mexican economy. The present research leverages the novel dynamic autoregressive distributed lag (ARDL) simulations approach and uses annual frequency data from 1980 to 2018. Empirical findings from the ARDL bounds test substantiate the presence of long-run association among studied variables. Furthermore, the result of the novel dynamic ARDL simulation does not validate the Environmental Kuznets curve (EKC) hypothesis. Thus, implying that Mexico's economy remains at the scale stage, with a scope of economic expansion relative to environmental quality. However, the Pollution Haven Hypothesis (PHH) is validated. Interestingly, natural resource rent accompanied with energy use and foreign direct investment deteriorate the environmental quality in the short-and long-run. However, technological innovation seems to emanate as a panacea for environmental degradation in the long-run. Result analysis also demonstrates that 10% positive and negative simulation graphs for the studied variables. The Frequency Domain Causality analysis also corroborates the above findings. These findings have far-reaching policy implications for Mexico's sustainable environment amid prudent use of natural resources, which are prescribed in the final section.

The Macroeconomic Influence of Recent Political Conflicts in Africa: Generalized Synthetic Counterfactual Evidence

This paper measures the macroeconomic influence of recent political crisis, protest and uprisings in Africa with the generalized synthetic control method and evaluates the role played by natural resource dependence on the modulation of the nexus. We find that political crisis, protests and uprisings have a significant and negative nexus with economic growth while the nexus is positive with investment and price level. For economic growth, the deviation of the actual series from the counterfactual is negative, instantaneous, persistent and highly significant; indicating non-negligible costs of the shock. Indeed, dependence on natural resources amplifies the negative influence of political crisis, protests and uprisings on GDP. Finally, the more the treated country depends on natural resources, the more it becomes resilient to the investment losses caused by political crisis.

A meta-analysis of cross-country context effects on the link between green product strategy and financial performance

PurposeDecades of research offer mixed results regarding the relationship between green product strategies and corporate financial performance. On the one hand, many scholars put forward green product strategies as a source of competitive advantage and in turn enhance financial performance. On the other hand, some studies suggest the opposite – that green product strategies may encounter managerial difficulties or are too costly, consequently leading to meager, if any, financial gain. This study explores cross-country contextual differences as a contingency to resolve this inconsistency. Thus, the research question is, “Do stakeholders of a country affect the link between green product strategies and financial performance?”Design/methodology/approachUsing a meta-analytic approach, the authors examine three country-level contingencies related to stakeholders: the impact of regulatory (stringency of environmental regulators), economic (consumer economic wealth) and political conditions (democratic vs. authoritarian governments) of a country in which the effects of a green product strategy on financial performance may vary.FindingsConsistent with our predictions, the meta-analysis of 26 studies published over a 20-year period reveals that green products positively relate to financial performance in countries with lax environmental regulation, low consumer economic status and authoritarian regimes.Originality/valueThe authors applied both (natural) resource-based and resource dependence theories by focusing on the interactions between firms' internal resources/capabilities and the external resources that firms can access. By doing so, the study adds to our understanding of stakeholders as resource providers to enhance financial benefits of green product strategies and provide insight into key boundary conditions of the link.

Natural resource dependence and innovation efficiency reconsidered

In a recent contribution to Resources Policy titled ‘Natural resource dependence and economic growth: A TOPSIS/DEA analysis of innovation efficiency’, Mehdi Namazi and Emran Mohammadi (2018) propose a method for analyzing innovation efficiency and how it may help countries blighted by the resource curse to develop their innovation policies. Namazi and Mohammadi provide the first published research that combines data envelopment analysis (DEA) and the technique for order of preferences by similar to ideal solution (TOPSIS) to evaluate innovation efficiencies of countries. Their method enables them to also generate the innovation efficiency ‘improvability’ scores and innovation efficiency ‘resilience’ scores. However, their results are generated by infeasible linear programs and they committed a number of other errors that make their innovation efficiencies ‘inefficient’ and their findings meaningless. In this paper we suggest a way to overcome their infeasibility problems and correct their other errors. Once their errors are corrected and their method is used properly we believe their approach has merit.

Investigating economic growth and natural resource dependence: An asymmetric approach in developed and developing economies

Economic growth is one of the primary macroeconomic aggregates that governments seek to achieve due to the positive externalities it generates in a nation. Natural resources are one of those factors that can be seen as a blessing or a curse in determining economic growth. Nowadays, it has been shown that countries can base their economic growth on factors other than capital formation and the intensive use of the labour force. Therefore, this research aims to examine the causal link between economic growth and capital formation, the labour force, renewable energy and renewable energy, the technological innovation at a global level and in groups of countries classified according to their level of income, developed and developing countries. Next, second-generation econometric techniques have been used that control the cross-sectional dependence among the countries examined. Then, the long-term coefficients are examined using the Method of Moments Quantile Regression (MMQR). The results find that the regressor variables are positively associated with economic growth, showing heterogeneity in the various quantiles examined. In addition, there is variation in results when examining economic growth by groups of countries, which shows the intensive use of factors. The results obtained reveal several policy implications aimed at sustainable growth in the era of post-COVI-19.

Resource abundance and public finances in five peripheral economies, 1850s–1930s

The resource curse literature has established that taxation of natural resources might limit the long-term development of fiscal capacity in resource-rich countries. This article explores if, and how, natural resource abundance generates fiscal dependence on natural resource revenues. We compare five peripheral economies of Latin America (Bolivia, Chile, Peru) and Scandinavia (Norway, Sweden) over a period of 90 years, between 1850 and 1939. Both groups were natural resource abundant, but in the latter natural resource dependence decreased over time. By using a novel database, we find that fiscal dependence was low in Norway and Sweden, while high and unstable in Bolivia, Chile and Peru. This suggests that natural resource abundance should not be mechanically linked to fiscal dependence. An accounting identity shows that sudden increases in fiscal dependence were related to both economic and political factors: countries’ economic diversification, and attitudes of the relevant political forces about how taxation affects the companies operating in the natural resource sector.

The Macroeconomic Impact of Recent Political Conflicts in Africa: Generalized Synthetic Counterfactual Evidence

This paper measures the macroeconomic impact of recent political crisis, protest and uprisings in Africa with the generalized synthetic control method and evaluates the role played by natural resource dependence on the modulation of the impact. We find that political crisis, protests and uprisings have a significant and negative impact on economic growth while the impact is positive on investment and price level. For economic growth, the deviation of the actual series from the counterfactual is negative, instantaneous, persistent and highly significant; indicating non-negligible costs of the shock. Indeed, dependence on natural resources amplifies the negative effect of political crisis, protests and uprisings on GDP. Finally, the more the treated country depends on natural resources, the more it becomes resilient from the investment losses caused by political crisis.