Natural Resource Prices Research Articles

Effects of Natural Resource exploitation on CEMAC Countries Development: The Human Capital Channel

Purpose: The aim of this study is to determine the effect of the exploitation of natural resources on the development of CEMAC countries and to examine human capital as a transmission channel. Design/methodology/approach: In order to achieve our goal, we formulate a panel of 6 CEMAC countries over the period 2002-2018. This period of study is justified by the surge in the prices of natural resources in the market and also a fall of the prices of basic resources following two large exogenous shocks (subprime crisis and 2015 oil crisis). The estimation method use is the fixe effect, two stage least square and the Maximum likelihood with limited information. Findings: Of the estimation by the fixed-effect method show that natural resources abundance measured by: total rent, oil rent and forest rent has a negative effect on economic development. Likewise, human capital contributes to the transmission of these effects. The minimum education rate beyond which natural resources no longer have a negative effect on economic development, measured by the logarithm of GDP, is approximately 0.52, 0.51 and 0.48 respectively when we consider the total rent, the oil rent and the forest rent. This result is confirmed with the adoption of Maximum likelihood with limited information and the Two Stage Least Squared. Research limitations/implications: This study is limited in time and space. Moreover, the failure to take into account certain human capital or development variables. Originality/value: In the literature on the natural resources curse, the analysis of transmission channels in developing countries remains largely unexplored. The human capital component studied in this article is one of the first in the case of CEMAC countries. Also, we studied the effect of many resources, both renewable and non-renewable.

Natural resources as an assessment factor in alternative GDP dynamics

GDP is a key macroeconomic indicator which often serves as the basis for various classifications of the countries and also as a basis for the development of national and regional socioeconomic programs. The core methodology of GDP calculation is directly related to the US dollar, even under the current conditions of the extremely high international demand for this currency. However, in modern conditions, the importance of natural capital as a factor, that determines the level of economic development, is significantly increasing, the limited and rational use of natural resources should also be taken into account in economic progress of the countries assessing. For this very reason, the article offers an author’s own methodology of measuring GDP on the basis of world prices for natural resources (gold and also for the group of core food commodities). The paper tests the suggested methodology while analyzing the economic dynamics in the selected countries, from 2000 to 2019. Conclusions cover the issues of qualitative growth within the selected macroeconomic systems and also provide recommendations as to prospective directions for further application of the suggested methodology in statistical, analytical and forecasting practices around the world.

НА ПУТИ К ЗЕЛЕНОЙ ЭКОНОМИКЕ: ОПЫТ ФРАНЦИИ

Global environmental problems, the skewed economic inequality of the world's population contributed to the emergence of the concept of a green economy. The purposeful fight against climate change has been going on for more than a decade. 2020 has given it a new impetus and united political, private and social will to overcome perhaps the greatest threat to humanity. The transition to the concept of a green economy is impossible without building an effective strategy for financing innovative projects. The concept will improve the well-being of people, improve the environmental situation and ensure social balance in the world. In our country and abroad, interest in the issues of environmental management of organizations has increased. In the EU, the concept of a green economy is considered within the framework of stimulating growth and improving energy efficiency, the reproduction of environmentally friendly materials, which has a beneficial effect on natural assets and improves the quality of life of people. France occupies a leading position in the development of the concept of a green economy. The country's course is focused on greening, which provides for the creation of new products, the use of environmental technologies and innovative production methods, which allows balancing macroeconomic conditions and stabilizing prices for natural resources. Further development should be focused not only on maximizing profitability, but also on meeting social and environmental needs. In this context, environmental entrepreneurship acts as a driving factor in the development of public life. The experience of France in the framework of the implementation of the green economy concept is the most relevant.

Natural resources volatility and South Asian economies: Evaluating the role of COVID-19

Since the emergence of the Covid-19 pandemic, global economic performance has been severely affected, which also causes natural resource price instability. Recently, scholars and policy-makers put more attention towards the global economic performance and natural resource volatility nexus. This study investigates four South Asian economies (Afghanistan, Bangladesh, India, and Pakistan) from 1991 to 2021. Using the (Pesaran, 2007) CIPS unit root test, the study found first differenced stationary data cointegrated as confirmed by the (Westerlund, 2007) cointegration test. However, this study employed the CCEMG approach to identify the association of natural resource volatility and economic performance in the selected region. Empirical results revealed that total natural resource rents, forest rents, and oil prices negatively and significantly affect economic performance. While oil rents, coal rents, and natural gas rents have a significant contribution to the region's economic performance. Results further illustrate a bidirectional causal association between economic performance and other variables except for coal rents, which is unidirectional. Based on the empirical findings, the current study acclaims some practical implications that could potentially reduce the negative influence of natural resources volatility on economic performance.

Natural resources commodity prices volatility and economic performance: Evidence from China pre and post COVID-19

Volatility in the prices of natural resources particularly in the Covid-19 period is the subject of major concern in recent times. Although many studies have empirically investigated the influence of oil prices on economic growth and Covid-19 on oil prices. However, the current study contributes to the literature by investigating the causal linkage of natural resources commodity prices and economic growth in the pre and post Covid-19 period for China over the period from January 01, 2019, to April 01, 2021. This study employed the wavelet power spectrum, and the wavelet coherence approaches, and the frequency domain causality test, which is known for the causal identification in the long-run, medium-run, and short-run. The empirical findings reveal that the natural resource commodity prices are more vulnerable than the economic performance particularly in the Covid-19 peak period in China. However, the wavelet coherence approach demonstrates that a bidirectional causal association exists between natural resources commodity prices and economic performance at different frequencies and time periods. Additionally, the frequency domain causality test confirms that the natural resource commodity prices volatility significantly causes economic performance only in the medium-run. Based on the empirical findings, this study recommends that innovative technological and precautionary measures must be taken to accommodate or overcome natural disasters in the future, and tackle natural resources commodity prices volatility.

The relationship between trade openness and government resource revenue in resource-dependent countries

Natural resource-abundant countries are generally dependent on resource revenue for their government budgets. Given the volatile prices of natural resources, such high dependence has led to the need for government revenue diversification, that is, shifting from resource sources to non-resource sources. Meanwhile, recent globalization helps promote economic growth, but it makes resource-dependent countries more vulnerable to fluctuations in resource prices, motivating them to diversify revenue sources for sound fiscal policies. Thus, examining the role of international trade in government revenue diversification is an important issue for resource-dependent countries, which has not been examined empirically in the literature. To fill the research gap, this study discusses this issue in resource-abundant countries. An autoregressive distributed lag model is used with panel data of 13 countries from 1996 to 2014. Estimations reveal a negative long-run association between government resource revenue and trade openness. Resource-abundant countries that promote trade liberalization tend to break down the resource-dependent structure of government revenues. Our analysis also shows a negative long-run association between government resource and non-resource revenues, which suggests the substitutability between the two government revenue sources. The promotion of government non-resource revenues would help governments receive the benefits of stable government revenues.

Are Trends Stochastic or Deterministic? A Reappraisal of Persistence in Natural Resource Prices

Are Trends Stochastic or Deterministic? A Reappraisal of Persistence in Natural Resource Prices

Are Trends Stochastic or Deterministic? A Reappraisal of Persistence in Natural Resource Prices

Are Trends Stochastic or Deterministic? A Reappraisal of Persistence in Natural Resource Prices

Regional Investigation for Economies of Development Status on Changes in Export Structure of Deterioration Terms of Trade

The theory of Deterioration Terms of Trade states that the terms of trade between primary commodities and manufactures have a negative deterministic trend. However, the terms of trade for primary commodities have improved significantly because of higher prices of raw materials and natural resources due to the rapid development of some emerging developing countries. Literatures argued that the deterioration in terms of trade is the type of country in which the goods are exported rather than the types of goods exported by such countries are primary or manufactured goods. This paper employs regression models of alternative economies to analyze the correlation between terms of trade and manufactured goods export ratio. Results demonstrated that the Prebisch-Singer Hypothesis holds for all the economies except the developed ones, and the ITTs are worsened by increases in the proportion of manufactured goods for all the economies.

The volatility of natural resource prices and its impact on the economic growth for natural resource-dependent economies: A comparison of oil and gold dependent economies

The 21st century brought many changes to the world. From witnessing a technological boom and awareness about the environment to renewable energy and conscious use of natural resources, the current century had offered a lot in the previous two decades. However, the question of natural resources being a curse or a blessing to the natural resource-producing economies is still unanswered and gathers many scholars' attention. The current study investigates the volatility of natural resources, oil and gold, and studies the impact of volatility in natural resource prices for resource-producing economies. The global market for crude oil has experienced significant downturns during the last two decades, the financial crisis of 2008 and the Covid 19 crisis of 2020, for instance. Compared to that, the global gold market has experienced relatively less impactful downturns during the same period. We explore how the volatility in oil and gold prices impact the growth of the resource-producing economies. The study is conducted on the top oil-producing countries and the top gold-producing countries on data from 2000 to 2020. The study finds that in the long run, the volatility in both oil and gold markets could be detrimental to the economic growth as measured by the GDP for the resource-producing economies. Our research also shows that the impact of the volatility in prices on the growth of economies is not consistent for all resource-producing economies in the short-term using PMG/ARDL methodology.

How COVID‐19 has Affected Africa's Development

Africa has experienced over a decade of sustained economic growth. However, since the outbreak of Ebola, there have been pertinent questions as to whether and what extent such outbreaks have developmental implications in the continent. It is in this context that this article investigates whether and to what extent the ongoing COVID-19 pandemic affects the development of Africa’s economies. Using data from various international organizations, we show that the pandemic has indeed slowed down African economies, albeit in differing degrees across various regions of the continent. However, the slowdown is moderate compared with economies in high-income countries and the world economies as a whole. We contend that while it is difficult to predict when the crisis is going to end, the continent can navigate itself out of it by leveraging on the ever-increasing global prices of agricultural products and natural resources.

Care to Wager Again? An Appraisal of Paul Ehrlich's Counterbet Offer to Julian Simon, Part 2: Critical Analysis

ObjectiveThis paper provides the first comprehensive assessment of the outcome of Paul Ehrlich's and Stephen Schneider's counteroffer (1995) to economist Julian Simon following Ehrlich's loss in the famous Ehrlich‐Simon wager on economic growth and the price of natural resources (1980‐1990). Our main conclusion in a previous article is that, for indicators that can be measured satisfactorily or can be inferred from proxies, the outcome favors Ehrlich‐Schneider in the first decade following their offer. This second article extends the timeline towards the present time period to examine the long‐term trends of each indicator and proxy, and assesses the reasons invoked by Simon to refuse the bet.MethodsLiterature review, data gathering, and critical assessment of the indicators and proxies suggested or implied by Ehrlich and Schneider. Critical assessment of Simon's reasons for rejecting the bet. Data gathering for his alternative indicators.ResultsFor indicators that can be measured directly, the balance of the outcomes favors the Ehrlich‐Schneider claims for the initial ten‐year period. Extending the timeline and accounting for the measurement limitations or dubious relevance of many of their indicators, however, shifts the balance of the evidence towards Simon's perspective.ConclusionThe fact that Ehrlich and Schneider's own choice of indicators yielded mixed results in the long run, coupled with the fact that Simon's preferred indicators of direct human welfare yielded largely favorable outcomes is, in our opinion, sufficient to claim that Simon's optimistic perspective was largely validated.

Care to Wager Again? An Appraisal of Paul Ehrlich's Counterbet Offer to Julian Simon, Part 1: Outcomes

ObjectiveThis paper provides the first comprehensive assessment of the outcome of Paul Ehrlich and Stephen Schneider's counteroffer (1995) to economist Julian Simon following Ehrlich's loss in the famous Ehrlich‐Simon wager on economic growth and the price of natural resources (1980‐1990).MethodsLiterature review, data gathering and critical assessment of the indicators and proxies suggested or implied by Ehrlich and Schneider. Critical assessment of Simon's reasons for rejecting the bet. Data gathering for his alternative indicators.ResultsFor indicators that can be measured satisfactorily, the balance of the outcomes favors the Ehrlich‐Schneider claims for the initial ten‐year period. Extending the timeline and accounting for the measurement limitations or dubious relevance of many of their indicators, however, shifts the balance of the evidence towards Simon's perspective.ConclusionAlthough the outcomes favour the Ehrlich‐Schneider claims for the initial ten‐year period, Ehrlich and Schneider.s indicators yielded mixed results in the long run. Simon's preferred indicators of direct human welfare would yield largely favourable outcomes if the bet were extended into the present. Based on this, we claim that Simon's optimistic perspective was once again largely validated.

Does the price of natural resources affect firms’ total factor productivity? Evidence from a natural experiment in China

This study uses a natural experiment on a market reform implemented in China in 2006 to examine how the marketization of the pricing of natural resources affects the total factor productivity (TFP) of resource-oriented firms, focusing on Chinese A-share stocks. We adopt the difference-in-differences (DIDs) approach and show that the reform has significantly improved firms’ TFP. This study uses propensity score matching and dynamic DIDs and finds consistent results. Cross-sectional tests indicate that the TFP improvement is stronger for firms with greater misallocation of resources, lower political expropriation risk, and greater financial constraints. We also document that firms’ TFP has a catch-up effect and show that the reform has narrowed TFP gaps between firms. Our study provides clear policy suggestions and offers evidence of the economic consequences of the reform of the natural resources market.

Heterogeneous impact of natural resources on income inequality: The role of the shadow economy and human capital index

The stylized facts show that natural resource prices are highly volatile. The immediate consequences of such volatility are changes in the labor force’s income distribution and public spending. In this context, this research aims to examine the impact of natural resource rents on inequality, including the role of the shadow economy and the human capital index. We use annual data and second-generation panel data cointegration techniques to correct potential bias caused by slope heterogeneity and cross-section dependence. We found that natural resources have a heterogeneous impact on income inequality between countries. The cointegration results indicate a long-run equilibrium relationship among the four series in high, low-middle, and low-income countries. Likewise, natural resource rents and inequality have a one-way causal relationship in lower-middle-income countries. Income inequality causes the shadow economy in most groups of countries. Our results show that countries with the highest income dependence on natural resources have higher income inequality levels. Our research contributes to the debate on income inequality sources and the structural mechanisms that guide public policies to achieve Sustainable Development Goal 10. The article ends with a call for politicians to promote the legalization of undeclared economic activities and reduce dependence on natural resources as mechanisms to mitigate the structural problem of income inequality.

Circular Economy, resources and environmental metabolism

Resource allocation is increasing as an global issue, because resources (natural resources, ores, oil resources) are in limited quantities worldwide, as opposed to ever-increasing human needs. Therefore, resource allocation is the deployment and optimal utilization of a defined resource. In the economic arena, allocation is usually controlled by the pricing mechanism: if the demand for a resource is high, then the cost of the resources used will be high; due to such high prices, this resource will be used for limited needs. When the price of natural resources and materials rises, in response to volatile markets and increased competition, developed nations are looking at possible alternatives as a promising economic model. In that regard, the circular economy is considered as an expected solution. As one of the objectives of the circular economy is the need of resources, improving resource efficiency or the need for resource efficiency targets remains equally relevant for circular economy policies. The challenges in the circular economy are long-standing and crucial in tackling resource depletion and the new environmental problems facing humanity. The fundamental and comprehensive structural changes are in the complete redesign of the existing linear economic system and the acceptance and comprehensive inclusion of the circular economy as a new economic hope. A circular economy is one in which products are recycled, repaired or reused rather than thrown away, and in which waste from one process becomes an input into other processes. Based on the general concern that the world is entering an intensified period of resource stress, a commitment to urgent behavioral research to identify the most important natural resource trends affecting the human environment is more than necessary. The identified trends - which will include patterns of demand, supply, availability, price levels, and price volatility - are shaped and influenced by emerging climate changes, evolving demographic patterns, increasing economic development, and human induced environmental degradation.

Method for measurement and evidencing of environmental debt (MEED) in productive systems

Responsible use of natural resources is an important social and political issue, and as such, it is an essential factor in business decision-making. In this scenario, accounting practices need to include valuation and analysis of external costs and environmental debts as part of the information available to decision-makers. Therefore, this study focuses on proposing a method to measure and evidence the Environmental Debt (ED) of a productive system. For this purpose, Design Science Research was used to conduct the research. Its main result makes possible to propose the Measurement and Evidencing of Environmental Debt Method (MEED). The method was developed from a combination of resources identified in the literature, propositions of research groups, from consulting market methods and international organizations involved with the recognition of prices of natural resources. The results of applying MEED reveal the valuation and disclosure of external costs and environmental obligations from the internalization of environmental externalities related to the primary objective of accounting, namely, valuation of equity. The method was tested in the poultry sector, specifically the broiler production, and evaluated by experts in multidisciplinary areas. Environmental externalities are present in the analyzed system, negatively affecting equity.

Analyzing trade and financial relations in Russia today

Subject. The article discusses trading and financial relations of today’s Russia. Objectives. The article is to determine requirements for trading and financial relations to progress in Russia today and evaluate how they influence the economic growth. Methods. The study is based on the systems approach and the statistical analysis. Results. Having analyzed trading and financial relations, I found what can give an impetus to the contemporary economy in Russia, i.e. oil prices, related risks. The article demonstrates that government bonds (federal loan bonds) cushion and set off an increase in the foreign exchange rate. The dynamics of the oil price and the issue of federal loan bonds shape the environment where trading and financial relations evolve in Russia today, i.e. export prices for natural resources outgrowing prices for some commodities; a stalling growth in the acquisition of financial assets, debt instruments and a growth in liabilities, equity and shares of mutual funds; a growing pace of long positions of forward, futures, options contracts due to a slow down in short positions; rising pace of official reserve assets. As long as the international trade slows down and the global recession begins, the existing trading and financial relations resulted in a palpable economic growth. Conclusions and Relevance. Opportunities for the development of trade and financial relations in contemporary Russia are conditioned by the changing world order, which determines the dynamics of economic growth. The findings expand the knowledge and create new competencies of governmental authorities when making managerial decisions to ensure the effective design of the Russian economy in terms of the current trading and financial policy.

Evaluating ‘natural resource curse’ hypothesis under sustainable information technologies: A case study of Saudi Arabia

The role of Information and Communication Technologies (ICTs) in economic growth is widely documented in the scientific literature, while a relatively little attention is put on technology-embodied natural resource growth, energy demand and green development in the Kingdom of Saudi Arabia (KSA). This crucial issue needs fair assessment and analysis for country’s long-term growth. The KSA’s Vision -2030 of resource conservation agenda focuses on utilization of its precious natural resources, which are going to become scarce due to their higher marginal productivity that surpassing the marginal productivity of factor inputs in terms of labor wages and return on investment. The country values its ICTs infrastructure and motivated to build strong technology hub for reducing resource extraction costs and carbon abatement costs. In a given scenario, the study examined the technology-driven natural resource growth hypothesis under multifaceted factors, including carbon pricing, financial and trade liberalization policies, industrial value added, ores and metal exports, and population density. The study analyzed a time series data for a period of 1970–2018 for robust inferences. The results show that computer communications, telephone-mobile subscriptions, and technical cooperation grants promote country’s total natural resource rents at the cost of higher energy demand, which increases carbon emissions. The per capita income and population density increases energy demand in the country. The study established an inverted U-shaped relationship between country’s per capita income and fossil fuel combustion during the given time period. The efficient use of ICTs factors helpful to reduce carbon emissions and fossil fuel combustions in carbon pricing model. The natural gas rents do not support country’s economic growth, which substantiate the ‘resource curse’ hypothesis, while oil rents and forest rents exhibit a positive impact on country’s economic growth to support ‘resource blessing’ hypothesis. The inter-temporal setting shows that mineral rents will negatively influence country’s economic growth over a time horizon. Thus, the technology-driven natural resource growth is vital to reduce natural resource prices and carbon abatement costs, which is the forefront challenge for policy makers in proposing long-term e-sustainable policies in a country.

Complex property rights and Coasean bargaining in natural resource management

ABSTRACT This paper contributes to the debate on whether private or common property rights are better for advancing the sustainable management of natural resources. This contest between public and private ownership is often exaggerated, we claim, because in the real world, complex entitlements with varying degrees of privateness/publicness prevail. Property rights belonging to families, companies, clubs, corporations, and communities are simultaneously common to the members/shareholders and private to the entities. We call these entitlements private-common entitlements. When we acknowledge this complexity, it becomes evident that neither private nor common ownership rights are alone responsible for resource depletion. Instead, depletion is caused by freeriding or evading the payment of the full price of natural resources. This invites Coase’s solution to resource allocation. Therefore, the key problem is whether and how Coasean bargaining is employed to allocate ownership over resources threatened by depletion. We contribute to the debate by showing that Coase’s approach promotes not only economically efficient but also ecologically sustainable resource management. Often, this approach would lead to the establishment of largely private property or control rights by largely collective/public entities. We apply this theoretical framework to the development of a ski resort in Pirin Mountain, Bulgaria.