Natural Resource Dependence Research Articles

Diversification of exports and vulnerability of the economies of sub-Saharan African countries: Role of dependence on natural resources

Export diversification in Africa is a topic of great interest, but its impact on economic vulnerability has not been sufficiently studied. Using a dynamic and panel threshold effects, this article examines the role of natural resource dependence in the relationship between diversification and economic vulnerability within a sample of 22 countries of the sub-Saharan Africa. We consider the modified Finger-Kreinin index and the share of manufactured exports in total exports as a measure of export diversification. Our results show that export diversification is a means of substantially reducing the level of economic vulnerability to which countries’ economies are exposed. However, its effect on reducing the level of economic vulnerability is effective for a level of natural resource dependence below 38.7%. These results imply that it is important to take into account the threshold thus identified in the reorientation of their diversification policy based on a strategy of regional integration.

The potentials of emulsified modified bitumen (EMB) for coating and insulation: An overview

Fungi mould and bacterial growth in the inner wall of buildings and operation theatres is a serious problem in the health sector. Too much moisture and dirt stimulate the growth of microorganisms. Therefore, the use of bitumen or emulsified modified bitumen product because of its adhesive properties and effective performance in coating and insulation is a promising technique to tackle this problem. However, the vast majority of bitumen and its modified products are mainly used in road paving, roofing application, and roads construction applications. Thus, the EMB product for the purpose of coating, soundproofing, and insulation needs to be properly addressed. Results obtained from this critical review have revealed the ability of EMB in insulation and coatings, as EMB paints showed a better performance than non-modified bitumen emulsion in terms of coating adhesion, aging, and heat insulation. Since the modified emulsions from waste substances is comparable to neat bitumen emulsions, the developed EMB from industrial waste will address natural resource dependency as well as the enormous environmental problem emerging from the overuse of natural resources. Further works nevertheless are needed to gain a better understanding of the mechanisms of EMB formulation in order to promote optimum industrial application.

The Effect of Natural Resource Dependence on Energy Intensity

The Effect of Natural Resource Dependence on Energy Intensity

Natural Resource Dependence of Communities around the Giant Panda Protected Land Based on Livelihood Capital

As the flagship species of biodiversity protection, the giant panda has an umbrella protection function. China is committed to building a natural protection system with national parks as the main body to achieve sustainable development. In this paper, the sustainable livelihood analysis framework is used to study the livelihood of farmers in the surrounding communities of the giant panda protected land. Based on the data obtained from the field survey, the evaluation index of the natural resource dependence of the community farmers is established, and then the measurement model is constructed to analyze the main factors affecting the natural resource dependence of the communities. The results showed that: (1) The food dependence of farmers around the giant panda protected area is the highest (46.32%), followed by energy dependence (37.67%), and income dependence is the lowest (27.91%). (2) In terms of regional characteristics, the natural resource dependence of farmers is the lowest in Minshan and Qionglai, followed by Daxiangling and Xiaoxiangling, and Liangshan is the highest. (3) Physical capital has no significant effect on the natural resource dependence. The influence of human capital, natural capital, and social capital on the natural resource dependence is significant.

Exploring the role of tourism dependency on COVID-19 induced economic shock in the Small Island Developing States

ABSTRACT All countries have suffered significant economic losses due to COVID-19 but some are affected more than others. A number of vulnerabilities explain the magnitude and differences in the economic shocks felt worldwide. This paper uses Ordinary Least Squares regression techniques to estimate the role of tourism dependency in explaining the differences in the COVID-19 induced economic shock in a sample of Small Island Developing States. The model also includes remittances, natural resource dependency, government debt and a measure of the quality of governance. The results confirm tourism dependency plays a significant role in explaining the cross-country differences in economic shocks. The economies that are more dependent on tourism have suffered larger economic shocks but remittances and natural resources have mitigated the negative impacts. The differences in the quality of governance also matter but debt levels do not explain the cross-country variations in the economic shocks. Hence, these fragile and small island economies need to develop appropriate economic diversification strategies, strengthen traditional economic activities and adapt new strategies, products and innovative business models for their tourism industry as the pandemic recedes and global travel resumes.

Nexus between economic growth, financial development, and energy consumption in Sub‐Saharan African countries: A dynamic approach

AbstractThis study investigates the nexus between economic growth, financial development, and renewable energy consumption in Sub‐Saharan African countries. Using a dynamic approach and seemingly unrelated regressions (SUR) from 48 countries over the period 2000–2019, the findings show that financial development, government expenditures, capital, international trade, education, and the quality of governance have positive impacts on economic growth while inflation has a negative effect. In the long run, energy consumption and foreign direct investments increase economic growth only in high income and upper middle‐income countries (HI‐UMIC). In contrast, in lower middle‐income countries (LMIC) and low income countries (LIC), the cost of transforming renewable energies is a burden for growth. This reverse effect on growth in LMIC and LIC is amplified by natural resource dependence and foreign direct investments (FDI) volatility. Furthermore, renewable energy consumption is driven by financial development, growth, urbanization, foreign direct investment, education, and the quality of governance via scale effect. From the results, new insights for policymakers such as fiscal policies, trade‐led growth policies, and monetary policies, are provided to support the renewable energy sector, enhance financial development and economic growth.

The Impact of Smart City Construction on the Quality of Foreign Direct Investment in China

As a new model of urban development, it is important to scientifically analyze the impact of smart cities on the quality of foreign direct investment (FDI). This article constructs a difference in differences’ model to test the impact of foreign direct investment quality in smart city construction based on panel data of 226 prefecture-level cities from 2006–2017. Study shows the following. (1) The construction of smart cities has significantly improved the quality of FDI utilized in pilot cities. (2) Heterogeneity analysis shows that smart city construction significantly contributes to the quality of FDI in the western city subsample and a subsample of cities with low natural resource dependence. After a series of robustness tests and placebo tests, the above conclusions still hold. The results of the study suggest that China should further promote the construction of smart cities to optimize the quality of foreign direct investment and promote high-quality economic growth. The findings of the study also provide theoretical and practical references for the construction of smart cities in China and other countries around the world.

The impact of extractive industries on regional diversification – evidence from Vietnam

Economic diversification is seen as imperative to reduce resource-dependent economies’ vulnerability to a broader resource curse. Despite its importance, we know surprisingly little about the relationship between natural resource-dependence and economic diversification. The few insights that exist, remain on a country-level. But, since the importance of natural resource extraction differs across regions in the same country, it would be odd to assume that the effects of extractive industries on the diversification performance would be felt evenly countrywide. Also, extractive regions in the same country can manage to develop new non-extractive industries with varying success. Understanding this relationship on a regional level is important in order to identify conditions under which diversification of extractive regions is likely to materialize. This paper therefore aims to bring the study of the relationship between extractive industries and diversification to a regional level. To this end, we analyze how the regional importance of extractive industries has affected the entrance of non-extractive industries to Vietnamese provinces between 2006 and 2010. Furthermore, the study investigates to what extent region-specific conditions – that is the regional industrial profile and institutions - moderate the effect of the regional presence of extractive industries on regional diversification. Our findings reveal that extractive industries tend to constrain non-extractive industry entries on a regional level. However, the results also show that adequate regional institutions can moderate this negative effect on the regional diversification performance. Thereby the study underlines the need and value of studying the relationship between extractive industries and diversification also on a regional level.

Linking natural resource dependence and industrialization in sub-Saharan African countries

ABSTRACT Despite the growing literature on natural resources, little is known about the effect of natural resources on industrialization, particularly in sub-Saharan African countries. The aim of this paper is to fill this gap by assessing how natural ressources affect the industrialization process in 27 sub-Saharan African countries over the period 2000–2016. To carry out our investigation, we used several estimation methods including Ordinary Least Squares (OLS), Fixed Effect (FE) and Generalized Moments Methods (GMM). The results show that there is a negative relationship between natural resource dependence and industrialization. A U-shaped relationship between natural resource dependence and industrialization is established. Furthermore, the disaggregation of natural resource rents shows that while oil rent, gas rent and mineral rent hamper the industrialization process, the effect of forest rent and coal rent on the industrialization is positive. Finally, we show that governance plays an important role in mitigating the negative impact of natural resources on industrialization. Thus, governance can be an effective way to break the resource curse in sub-Saharan African countries.

Natural resource dependence: understanding why companies (do not) disclose on biodiversity

Biodiversity is the foundation of all life on earth and plays a critical role in solving grand challenges like climate change. Yet, corporate disclosure on biodiversity remains scarce. We develop a theoretical model to explain why companies (fail to) disclose on biodiversity, by applying and extending natural resource dependence theory. Our model shows that companies may omit to disclose on biodiversity when they perceive an operational or regulatory risk associated with dependence on biodiversity. By contrast, when companies view biodiversity as material or a reputational threat, they are more likely to engage in disclosure. In addition, materiality positively moderates the relationship between biodiversity risk and disclosure. We discuss ways in which the topic of biodiversity, in spite of its complexity, can be brought to the forefront of manager’s minds in order to place greater emphasis on biodiversity in corporate sustainability management.

An estimate of the Genuine Progress Indicator for Iceland, 2000–2019

Target 19 of the United Nations' Sustainable Development Goal 17 calls for the use of alternative measures of economic welfare in addition to Gross Domestic Product (GDP). The Genuine Progress Indicator (GPI) is an example of such a measure, including various non-market benefits and environmental and social costs unaccounted for in GDP. This study presents the results from the first estimate of the GPI for Iceland over the period 2000–2019. Iceland represents an interesting case study given its remoteness, environmental vulnerability, natural resource dependency, and fluctuating economic performance in recent years, which has featured a banking collapse and tourism-fuelled resurgence. The study finds that Iceland's GPI was equal to between 2.41 and 3.05 times the value of national GDP. Statistics for both GDP and the GPI peaked in 2019 at 2,970,076 (USD M 24,237) and 7,163,300 million ISK (USD M 58,443), respectively. Mean annual rates of per capita expansion for both GDP and the GPI were 2.1% and 0.6%, respectively. Despite the scale of the Icelandic GPI, the study also revealed non-negligible values for environmental and social costs which, in aggregate, were equal to between 17.8% and 25.4% of the value of consumption.

The effect of quality of Institutional corruption and natural resources dependence on health in Iran

The effect of quality of Institutional corruption and natural resources dependence on health in Iran

The effects of natural resources on human capital accumulation: A literature survey

AbstractWe survey the growing literature studying the effects of natural resource abundance or dependence on human capital accumulation, a key factor in development and economic growth. This survey distinguishes between measures of resource abundance versus dependence, and between input, outcome, or participation measures of education and health. We find that a majority of studies find adverse effects of natural resource abundance or dependence on education and health, but that a small to sizeable minority find mixed or beneficial effects. The sheer robustness of negative findings across numerous approaches lends credibility to theories that reliance on resource extraction risks negative effects on the quantity or quality of supply of education and health services, and the demand for advanced education. At the same time, the minority of studies finding positive resource effects suggests there are both methodological and policy lessons that can be learned.

Corruption and banking soundness: does natural resource dependency matter?

PurposeThe natural resources curse theory argues the higher dependency on natural resources leads to many socio-economic problems. The purpose of this study is to examine the relationship between corruption and banking soundness and also to compare the extent of this effect between the two groups of rich and poor in natural resources countries.Design/methodology/approachTo this aim, the authors apply a panel data set comprised of 98 countries from 2012 to 2015.FindingsThe results show that nations with a higher level of corruption have poorer banking soundness. The authors also find that by considering the resource curse theory and the effect of natural resource rents in the model, the adverse impact of corruption on banking soundness is more substantial in countries with a higher natural dependency level (rich in natural resources).Originality/valueThough studies have been conducted on corruption and banking soundness, this paper, by using resources curse theory, articulates that corruption is one of the most critical factors affecting banking soundness and has a destructive effect on the health of the banking system and the economy of almost all countries, especially in natural resource-based economies. This study will appeal to banks authorities, governments, policymakers, oversight financial institutions and those who have a vested interest in regulating financial crimes globally. They can prevent financial and banking crises by cooperating in the fight against corruption worldwide.

Urban industrial transformation patterns under natural resource dependence: A rule mining technique

Urban industrial transformation is crucial for resource-based cities to break through the lock-in effect of natural resources dependence and achieve economic, environmental and energy sustainability. This paper proposes a rough set-based rule mining technique of learning, validation and generalisation to identify what influential factors, under which synergetic combination methods and influencing levels lead to successful industrial structural transformation in resource-based cities. The extracted decision rules reveal the transformation patterns from the rationalisation and optimisation of industrial structure, as well as the potential path transmission mechanism that help prevent the negative effects of resource dependence. The results from China's 115 resource-based cities during 2004–2017 show resource curses that may hinder industrial structural transformation are not absolute existence but conditional appearance. Abundant resources in superior urban transformation cases promote the rationalisation and optimisation of industrial structure by driving material and human capital investment under a reasonable government policy intervention. However, resource dependence squeezes out the technological innovation and marketing competition for developing private enterprises, challenging transformations that improve resource allocation efficiency based on marketisation. The identified patterns inspire policy-makers to adjust urban industrial structure through developing urban resource advantages and bypassing insufficiencies in historical transformation.

Environmental impact of natural resources on terrorism in Africa

This paper contends that, natural resources hardly instigate terrorism but via the environmental channel. To this end, this study scrutinizes the environmental impact of natural resources on terrorism over the period straddling 1980 through 2012 for a panel of 49 African economies. The count nature of terrorism data suggests the use of a negative binomial regression as a choice estimator, in which the following findings are established. First, the unconditional impact of total natural resources per capita on terrorism is negative and consistently significant across the model specifications. Second, the unconditional influence of environment (measured with carbon emissions) on terrorism is positive across the specifications. Third, the marginal effect of interactions between total natural resources per capita and environment is steadily negative for both domestic and unclear terrorism but positive for transnational terrorism. Four, the magnifying impacts of other confounders such as the lagged value of terrorism, surface areas, physical integrity rights and population are in tandem with expected priors. What is more, the empirical findings regarding the negative impact of total natural resources per capita however, diverge for the natural resource rents-a measure of natural resource dependence. Thus, maintaining a credible, sustainable and inclusive governance of natural resources constitute a formidable bulwark to fighting terrorism.

THE OIL CURSE VALIDATED: EVIDENCE FROM EURASIA AND LATIN AMERICA

Many studies have found a negative relationship between oil abundance and democracy. However, recent studies have tried to upend this correlation by employing time-series techniques or finding a conditionality on other factors. This study contributes to the literature by employing an Arellano Bond model that corrects for fixed effects and adopts new variables from recent empirical studies. Comparing Eurasia and Latin America from the 1960s to 2010, we find that the theory of a negative relationship between an abundance of natural resources and democracy remains valid.Keywords: natural resource curse, natural resource dependence, democracy, natural resource abundanceJEL Classifications: N50, H6, P28DOI: https://doi.org/10.32479/ijeep.10772

The Dual Dependency of Natural-Resource-Rich Labor Markets in Contemporary Society

This article presents an integrative theoretical framework of subnational natural resource dependence. I argue that rural natural resource dependence represents a special case of the core-periphery relationship, where rural, resource-rich labor markets form a dual dependency on both the global capitalist economy and the local natural environment. This occurs because the contradiction between spatially fixed natural resources and the mobility of capital prompts both external interests and local power elites to use their power to pressure rural labor markets in directions outside their best interest and to exploit rural labor. I argue that both extractive (e.g., mining, timber, agriculture) and nonextractive (e.g., tourism, real estate) forms of natural resource development share this contradiction. Although pushing different uses of the resource base, extractive and nonextractive development do not fundamentally vary in their exploitative relationship with rural labor markets.

How to reduce the degree of dependency on natural resources?

Many natural resources rich countries are characterized by natural resource dependency and lack of economic diversification. They experience lower economic growth due to excessive exploitation of natural resources, high resource price volatility, undermining the competitiveness of the non-natural resources sectors, and weak institutional quality. Economic diversification is viewed as a long-term solution to high economic dependency on natural resources. Although this diversification can take place in every sector of the economy, economic dependency on natural resources can be reduced through both private sector development and public sector reforms. This empirical research examines the factors that may affect a country's degree of dependency on natural resources. A dynamic flexible adjustment model is employed om an unbalanced panel data for 110 countries from 1990 to 2017, to estimate the relationship between private sector development, public sector reforms, taxation systems, and dependency on natural. The findings reveal that the degree of dependency on natural resource revenue will reduce with the development of the public sector including privatization and development of national taxation systems. Institutional quality and human development are crucial for reducing this dependency and the speed at which countries transition towards an optimal level of diversification.

Curse or blessing: how does natural resource dependence affect city‐level economic development in China?

Based on the ‘resource curse’ theory, this study uses panel data for 256 prefecture‐level cities in China from 2003 to 2016 to test the relationship and mechanism between natural resource dependence and economic development. The panel model and instrumental variable regression results show that natural resources generally promote economic development, but for 109 resource‐based cities, the influence of natural resources on economic development seems quite different. The panel threshold model shows that in the resource‐based cities, (i) resources have a ‘blessing effect’ on economic development during economic prosperity (GDP growth rate is greater than 12.1 per cent); (ii) the relationship is not statistically significant when the GDP growth rate is between 5 per cent and 12.1 per cent; and (iii) when the GDP growth rate is lower than 5 per cent, natural resources have a ‘curse effect’ on economic development. Furthermore, the results of the mediation effect model show that the mediation effect of industrial diversification on the relationship between resource dependence and economic development suppresses the promotion of natural resource on economy. An excessive concentration of resource industries has a crowding‐out effect on non‐resource industries in resource‐based cities, which reduces the level of industrial diversification and is not conducive to economic development.