Resource Curse Effect Research Articles

The impact of financial inclusion and natural resource endowment on China's carbon emissions in the post-covid-19 period

After the novel coronavirus pneumonia pandemic, how to control the pandemic and restore the economy to the pre-pandemic level as soon as possible to promote resilience and sustainable development has become one of the most important policy decision issues of global concern, Green development, with low-carbon economic development as its core essence, is an important way to achieve high-quality economic development in the Post-Covid-19 period. The paper selects 30 regions in China from 2006 to 2022 and empirically examines the effects of financial inclusion and natural resource endowment on regional carbon emission (CE), and draws the following conclusions. (1) Resource endowment can increase carbon emission in the national and central regions, verifying the existence of the “resource curse effect” on carbon emission intensity, but not exist in the eastern region. In the western region, resource endowment has a positive but insignificant relationship with carbon emission intensity. Financial inclusion development suppresses CE, but not significant and financial inclusion promotes the decrease of carbon emission in east. While the central region has a relatively small impact on the positive effect of CE; the western region has an insignificant effect. (2) The level of urbanization promotes CE at the national and eastern levels, while not significant in the central and a negative effect in the west. GDP per capita can increase CE in all regions, but the western region has the largest elasticity. Industrial structure has a positive effect on CE nationwide and in all regions, with the smallest effect on CE in the eastern region; there is a positive correlation between energy intensity and CE in all regions. The research provides important references for different regions in China to realize low-carbon development.

On the conflict of natural resources hypothesis in Pakistan

Being a resource-based nation, Pakistan has been riddled with economic inadequacy attributable to its reliance on the resource industry. The conformity of natural resources to a curse or blessing cannot be ascertained merely from the perceptive of the influences of resource endowments on economic and social development, as the focus of previous studies proposed. This inquiry intentions are to scrutinize the nature of natural resources, government debt, trade globalization, government stability, and renewable energy consumption, as well as their implications for human development in Pakistan from 1990 to 2021, applying the novel dynamic autoregressive distributed lag (D-ARDL) simulations method and the frequency-domain causality (FDC) test to scrutinize long-, medium-, and short-run relationships. The observed results proposed that natural resource undesirably impact human development, confirming the existence of a resource curse effect. Simultaneously, government debt and government stability worsen, whilst renewables and trade globalization stimulate human development in long and short term. In addition, the FDC validates long, medium and short run causation hypotheses. The findings indicate an appropriate practice for the optimal use of resource rents in conjunction with lower public debt and a stable government system would culminate in human development and inclusive growth.

Digital finance mitigation of ' resource curse ' effect: Evidence from resource-based cities in China

This paper examines how digital finance mitigates the resource curse effect in China's resource-based cities. In order to mitigate the resource curse effect, the transformation and modernization of the digitally enabled financial industry have enhanced the allocation of financial instruments and stimulated economic growth. This paper empirically selects data from 2011 to 2019 from 219 Chinese prefecture-level cities (88 of which are resource-based cities) to construct a model for econometric analysis. The results indicate that: (1) The resource curse effect of resource-based cities in China is significant, and digital finance mitigates this effect effectively. (2) The two-step mediating effect test demonstrates that digital finance promotes financial deepening, financial expansion, and financial efficiency, optimizes the efficiency of urban capital allocation, alleviates enterprise financing constraints, and ultimately drives economic growth. (3) The aforementioned conclusions still prove valid after selecting geographic data as instrumental variables and G20 summit as exogenous policy shocks. This study explores the role of new finance in the resource curse effect in the digital era and provides a reference for comprehending the mechanism by which digital finance drives economic growth.

The impact of natural resource dependence and green finance on green economic growth in the context of COP26

The cop26 conference proposed that in order to cope with climate change, global countries need to focus on green economic growth (GEG) and accelerate green transformation. This paper adopts panel data of 30 provinces in China from 2008 to 2021 to measure the level of regional GEG, incorporating natural resource dependence, green finance and regional GEG into an overall research framework, and using a systematic GMM model to explore the relationship of them, and concludes as follows: (1) In the temporal dimension, GEG in China has increased, and each province generally shows a “U" shape development trend. From the spatial dimension, the overall change trend of each region shows that the GEG of each region in China shows an upward trend, with the western region increasing more and the eastern region increasing the least. (2) The phenomenon of “resource curse” exists in the eastern, western regions and the whole country, while insignificant in the central region, which does not reflect the “resource curse effect”. Green finance has a significant positive effect on the GEG of all the regions, with the most significant effect value in west, followed by Central and the weakest in East. (3) The per capita GDP of all regions can improve GEG. Environmental regulation promotes GEG at the national level and in the east, with a non-significant effect test in central and a negative in western region. Human capital level promotes GEG in all regions; foreign direct investment promotes GEG in all regions. The work can provide reference for achieving regional green economic transformation.

Can digital finance alleviate the resource curse? Evidence from resource-based cities in China.

This paper investigates how digital finance alleviates the resource curse effect from resource-based cities in China. This paper selects the data from 88 resource-based cities in China from 2011 to 2019 to construct the econometric model test hypothesis. The results show that (1) a resource curse does exist in Chinese resource-based cities. (2) Digital finance can alleviate the resource curse of resource-based cities in China, and this effect has two significant thresholds. (3) The heterogeneity test results show that digital finance's mitigation effect on the resource curse significantly differs in cities with different environmental regulation intensities and resource abundance. (4) Using the implementation of the broadband China strategy as the proxy variable of digital finance for the robustness test, the above conclusions are still robust. This paper considers the impact of digital upgrading on the financial industry and further studies the mitigation effect of digital finance on the resource curse. It provides a new perspective to study the recent changes in traditional issues in the digital era.

Impact of Resource on Green Growth and Threshold Effect of International Trade Levels: Evidence from China.

International trade levels can change the relationship between resource endowments and green economic growth. Therefore, this study tested the resource curse hypothesis from the perspective of green growth in China using provincial-level panel data for 2005–2017. Energy conservation and environmental improvement were considered under green growth to further analyze the regional mechanism of the resource curse. A panel threshold model was used to identify the impact of import and export threshold effects on the transformation of this mechanism. The resource curse hypothesis was found to be valid nationwide; it hindered green economic growth mainly by impeding energy conservation and curbing environmental improvement. In terms of regional differences in green growth, resource endowment had a positive impact on the eastern region, a negative impact on the central region, and no effect on the western region. When the levels of import and export trade exceeded the threshold values, the resource curse effect was enhanced by reducing energy conservation and weakened by promoting environmental improvement, respectively. Therefore, the Chinese government should establish a more reasonable import and export trade structure, promote changes to the energy structure and green technological innovation, and reduce the negative impact of resource endowment on green growth.

Does rubber expansion hinder the migration of rural labor? Evidence from southwest China?

AbstractThe expansion of agroforestry crops in South Asia has resulted in the reallocation of local agricultural resources, including labor force. Based on two‐wave panel data collected from more than 600 smallholder rubber farmers in southwest China, this study examines the impacts of rubber expansion on the migration of rural labor. The results show that smallholders planting more rubber plantations have significantly fewer migrant family members and lower likelihood of migration, revealing a significantly negative effect of rubber cultivation on the migration of rural labor. Given that the migration of rural labor is a major trend in rural economic transformation, rubber farming appears to result in the resource curse in rubber planting areas. In addition, a positive interaction effect between rubber cultivation and the price of natural rubber on the migration of rural labor reveals that the resource curse effect of natural rubber decreases with the decrease in the price of natural rubber. A period with a relatively low price of natural rubber provides an opportunity to foster the migration of rural labor in rubber planting areas.

“Booster” or “obstacle”: Can coal capacity cut policies moderate the resource curse effect? Evidence from Shanxi (China)

China’s recent coal capacity cut policies are expected to promote an energy supply-side revolution. However, their real impacts are still uncertain, especially for coal resource-based regions. Based on a dynamic computable general equilibrium (DCGE) model, this is the first study to investigate the effects of output-controlled and investment-controlled coal capacity cut policies on macroeconomy and the environment (including carbon emissions) in Shanxi province, the most typical representative of coal resource-based regions in China. The results show that the output-controlled coal capacity cut policy not only can reduce sulfur emissions and carbon emissions, but also can promote long-term economic growth and households’ income. Moreover, although the output-controlled coal capacity cut policy reduces financial revenues, this kind of policy can weaken the excessive inflow of production factors in coal industry and promote the development of non-coal industries. On the other hand, the investment-controlled coal capacity cut policy does not cause labor outflow from coal industry. This kind of policy can also reduce sulfur emissions and carbon emissions, though it shows a negative impact on macroeconomic factors, such as gross domestic product and welfare. We find that only the output-controlled coal capacity cut policy can effectively moderate the resource curse effect in coal resource-based regions, and therefore, this kind of policy should be the first choice of the Chinese government.

Does power grid infrastructure stimulate regional economic growth?

What are the effects of power grid infrastructure investment on the regional economy, and what explains these effects? This paper uses the restricted profit model and a seemingly unrelated regression (SUR) to estimate the short-term and long-term effects of power grid infrastructure on regional economic growth in 30 provinces in China from 1998 to 2017. Our results show that (1) power grid infrastructure investment has a significant positive effect on regional economic growth; (2) the associated long-term impact on the economy is greater than the short-term impact; (3) regions with high energy demands and good industry fundation benefit more from power grid infrastructure in the long term; (4) the output elasticity of power-importing and balancing regions maintained an upward trend after an electricity shortage problem had been solved, while the elasticity in power-exporting regions was positive but steadily decreased because of the resource curse effect. This paper suggests that in the current stage, the power grid infrastructure is a good policy tool to drive regional economies. However, there are differences in investment priorities among different regions.

Are natural resources a blessing or a curse for economic development? The importance of energy innovations

Based on China's provincial panel data from 2007 to 2019, this paper proposes the importance of energy innovation, uses the system GMM model to verify the impact of energy innovation on the resource curse effect, and supplements and improves the existing research. This study made the following findings: (1) The “resource curse” hypothesis exists in China. (2) Without considering other factors, natural resources and economic development are positively correlated, with a coefficient of 0.1872. (3) When the technology level variable is added, the coefficient of the natural resource variable drops to −0.1403. Due to the crowding-out effect, natural resources hinder economic development. (4) When the human capital variable is added, the natural resource coefficient is −0.2492. The “resource curse” is realized by crowding out the total amount of human capital accumulation. (5) When the material capital input variable is added, the coefficient of the natural resource variable is −0.163, but the absolute value drops significantly, indicating that the “resource curse” effect is alleviated. (6) When the energy innovation variable is added, the coefficient is 0.1401, and the coefficient of the natural resource variable is −0.1022, while the absolute value drops significantly, indicating that energy innovation largely alleviates the “resource curse” effect.

Resource Curse: Experience Study on Economic Development of Petroleum Countries

This paper studies the causes of “resource curse” from the perspective of “national utilization of petroleum resources” and uses the samples of eight typical oil resource-rich countries to study their national economic growth status. Empirical studies show that the resource curse effect of most countries is caused by “Dutch disease". Relying too much on the development of the oil resources industry, with the unreasonable industrial structure, the excessive export of oil resources, and the “extrusion effect” of production factors are the reasons that delay the technological innovation and development of the industry and inhibit the balanced development of other industries.

The regional Dutch disease effect within China: A spatial econometric investigation

Abstract As one of the primary causes of the resource curse effect, the “Dutch disease” effect (DDE) at the national level has been widely explored by previous studies. However, a special investigation on the existence and mechanism of the regional DDE within China, the largest developing country in the world, is still absent. Using the panel data of 30 provincial-level regions in China over 1994–2016, this paper for the first time employs the spatial Durbin model to examine the existence and two mechanisms (i.e., the resource movement effect (RME) and the spending effect (SE)) of the regional DDE within China. In particular, to highlight the spatial effect of the DDE and to obtain robust results, we use two kinds of spatial weight matrices in the spatial Durbin model: a traditional symmetric geographical distance weight matrix and a novel asymmetric mixed geography-economy weight matrix. The results show that natural resource sector boom has a negative effect on the development of both local and neighboring manufacturing sectors within China, suggesting that the regional DDE exists at China's provincial level. We also find that the DDE is mainly caused by the energy sector boom and is not evident in both metallic and non-metallic mineral sectors. Additionally, eastern China, central China, and western China all show the symptom of the DDE. Both eastern China and central China show a significantly negative direct effect and an insignificant indirect effect of resource sector boom, while both the direct and indirect effects of resource sector boom are evident in western China. Moreover, the RME and the SE are all responsible for the appearance of the regional DDE within China. On the one hand, resource sector boom induces labor and capital mobility from manufacturing to mining in both local and neighboring regions. On the other hand, resource sector boom raises inflation level in both local and neighboring regions. Finally, based on these findings, we provide some policy recommendations for relieving and avoiding the regional DDE.

Is financial development hampering or improving the resource curse? New evidence from China

This paper uses panel data from 30 provinces and cities in China from 2005 to 2018 to conduct an empirical test of path analysis through SEM models. The results show that the “resource curse” phenomenon has appeared in China. At the same time, the system GMM model is used to verify the ways in which financial development affects the relationship between natural resources and economic growth, and finally explore the path to break through the curse of resources through financial development. The conclusions are as follows: (1) There is a negative correlation between natural resources and economic growth, and the resource curse effect is significant in China. At the same time, the results indicate that the degree of financial development is different, and financial development has indeed eased the negative correlation between resource endowment and economic growth. (2) Natural resources endowment has a significant positive correlation with economic fluctuations, while financial development variables are significantly negative, indicating that a developed financial system can weaken the negative correlation brought by natural resources to economic growth through the fluctuation, to a certain extent to ease the “resource curse”. (3) Financial development can alleviate the negative impact of the “crowding effect” on the beneficial factors in the economy by promoting human capital and technological innovation. (4) Finance can effectively pool social idle funds and effectively invest in other socially beneficial constructions, improve investment efficiency, and alleviate the “resource curse” effect.

How does environmental regulation break the resource curse: Theoretical and empirical study on China

This paper incorporates environmental regulation, resource development and economic growth into a unified framework, and introduces a four-sector endogenous growth model, including environmental protection sector and resource development sector. Then, the resource curse coefficients of 232 prefecture-level cities in China are estimated based on the data of China's Industrial Enterprise Database from 1998 to 2013. Finally, the breaking effect of environmental regulation on the resource curse and its internal mechanism are empirically examined. The results show that the resource curse effect mainly occurs in the inland cities of the central and western regions and the northeast region; while the phenomenon of resource curse does not exist in most coastal and eastern cities, only a few cities are in the marginal resource curse areas and serious resource curse areas. The relationship between environmental regulation and the resource curse coefficient presents an inverted U-shaped curve, and only when the environmental regulation intensity crosses the turning point can environmental regulation break the resource curse. Environmental regulation can also indirectly break the resource curse phenomenon in full samples by improving green technological innovation level, lowering resource dependence and accelerating manufacturing development. However, the manufacturing development effect of environmental regulation on the resource curse has not yet been found in the resource curse areas.

Resource curse, environmental regulation and transformation of coal-mining cities in China

Since the Chinese economy has entered the new normal stage, the transformation of China's coal-mining cities has drawn considerable attention at all levels of government in China. In this paper, environmental regulation, resource curse, and economic growth are incorporated into one novel research framework. Based on panel data for 30 typical coal-mining cities, from 2005–2015, we mainly use the system generalized method of moments (SYS-GMM)to analyze the existence of a resource curse and attempt to analyze whether its crowding-out effects can be weakened by environmental regulations. The results show that in the whole sample period, there is a resource curse effect in China's coal-mining cities, and the direct effect of environmental regulation on economic growth presents an “N” curve relationship. In the sub-sample period, although all coal-mining cities have a resource curse effect in the first period (2005–2010), in the second period (2011–2015), the resource curse effect is no longer significant, especially in cities with a high economic development level, and the resource curse has been transformed into resource blessing. Additionally, according to indirect conduction effect analysis, excessive reliance on resources limits the development of human capital, technological innovation, and manufacturing. However, environmental regulations can weaken the transmission of resource dependence by promoting human capital and technological innovation, of which the promotion of technological innovation is the most significant. Therefore, environmental regulation may be a new and notable perspective that can help coal-mining cities turn the “curse” into “blessing” and promote the transformation of their green sustainable development.

Network curse effects: research based on listed manufacturing enterprises in China

PurposeAlthough the importance of network embeddedness attracted much attention in recent years, the interpretations of the underlying mechanism almost focus on the positive effects and neglect the potential negative aspects. This paper aims to use Chinese listed manufacturing enterprises, in the perspective of network embeddedness, to analyze whether resource curse effects exist in strategic networks of enterprises.Design/methodology/approachThis paper examines the resource curse effect that exists in enterprise networks through analysis of enterprise’s total factors productivity compared with those of its industry peers with different degrees of embeddedness. This paper then uses several different methods, such as clustered fixed and random effect model, core and peripheral model, and generalized method of moments estimation in endogenous checks, to detect network curse effects and reveal three potential mechanisms, including overinvestment, extra maintaining cost and innovation extrusion.FindingsThis paper finds that excessive network embeddedness hinders continuous improvement of productivity, which is derived from three mechanisms: excessive network embeddedness makes information redundancy among enterprises, and the imitate-follow effect makes excessive investment seriously; enterprises have to encounter more problems and difficulties, such as information coordination and benefit negotiation, to maintain network relationship, which leads to extra cost; enterprises with abundant network resources may tend to more emphasis on marketable operational abilities, resulting in resource decentralization and less investment on innovation, which is finally not beneficial to productivity improvement in the long run.Originality/valueCompared with previous literatures, this paper not only enriches the understanding of negative mechanisms in enterprise`s network embeddedness, but also unfolds the inconsistency of network embeddedness effects in practice and finds new evidence that the two types of network embeddedness are consistent in certain circumstances.

Research on Resource Curse Effect of Resource-Dependent Cities: Case Study of Qingyang, Jinchang and Baiyin in China

For a specific small-scale region with abundant resources, its copious resources tend to dictate the basic direction of its development, and may subsequently give rise to an industrial structure centered on the advantageous resources. This can give rise to an economic structure that lacks diversity, causing the economic development in the entire local region to fall into the dilemma of the resource curse. The present study conducts a case study from the perspective of small-scale regions, incorporating various types of resource-dependent cities in China, including Qingyang, Jinchang, and Baiyin, to interpret and analyze the resource curse effect by calculating a resource curse coefficient. Moreover, based on the regression model, the present study further discusses the empirical relations associated with the resource curse phenomenon. The results show that, regardless of whether a resource-dependent city is in the early, intermediate or late stage of its resource development, economic development is always plagued by the resource curse effect to a certain degree. Resource development cannot promote economic development, rather, it inhibits economic growth to some extent, resulting in an array of effects that are unfavorable to economic development, rendering the development unsustainable. For different types of resource-dependent cities, resource curse effect exhibits distinct characteristics. The resource curse effect is strongest for a resource-dependent city during an economic recession, is less severe during a development period, and is weakest during maturation. Resource development not only has a direct adverse impact on economic growth, but also often affects economic growth in multiple ways and on various levels through the Dutch disease effect, the crowding out effect, and the institution weakening effect. Until now, most results show that there is no obvious resource curse effect at the national and provincial level. The verification results of small-scale regions show that the resource curse effect at the city level still exists. In addition, the resource curse effect differs across different types of resource-dependent cities.

Corporate innovation and political connections in Chinese listed firms

This paper examines the relationship between political connections and corporate innovation in China. We find that political connections hinder corporate innovation activities and reduce innovation efficiency, suggesting the existence of political resource curse effect on corporate innovation in Chinese firms. In addition, we find that political connections reduce market competition and increase firms' overinvestments, leading to the crowding out effect with the limited resources insufficiently and inefficiently allocated to corporate innovation in firms. We also find that political connections weaken the impact of corporate innovation on firm future performance. Nonpolitically connected firms with patent applications have better and more effective future business performance than politically connected firms. This study provides policy implications for policy makers to reduce government-led resource allocation, improve market-oriented innovation mechanism, and standardize government subsidies to make the allocation process more transparent, so that corporate technological innovation can lead to the regional and national economic growth.

Natural resources: A curse on education spending?

In line with the rising interest in harnessing natural resource revenues for economic and human development through productive government investments, this paper aims to address an important blind spot in our understanding of the “resource curse” by contributing innovative insights on how natural resource wealth impacts government priorities and expenditure practices. Using a large panel dataset of 140 countries covering the period from 1995 to 2009, we find an adverse effect of resource dependence on public education expenditures relative to GDP that is robust to controlling for a range of additional covariates. Furthermore, our findings indicate that this resource curse effect on the government prioritization of education mainly stems from point-source natural resources. These results are of particular importance for the sustainable management of natural resource wealth in developing countries, as they could achieve especially high returns by investing resource revenues in public goods such as education. While this paper underlines the importance of institutions and government accountability, our findings also raise questions on the role of the private sector as a partner in development, as the extractives industry could consider increasing funding for education through Corporate Social Responsibility (CSR) initiatives.

A study of resource curse effect of Chinese provinces based on Human Developing Index

Traditional opinion considers that natural resources play an important positive role in economic development, while resource curse theory holds that natural resources usually obstruct economic increase. This debate needs further exploration. In most of empirical studies on resource curse theory, the economic development of an area is mainly evaluated by the Gross Domestic Product (GDP), however, the social and cultural contents of economic development are seldom considered. Thus, the Human Developing Index (HDI) was chosen to describe the comprehensive developing situation of an area in our study. Based on the panel data from the year of 2000 to 2011, the relationship between Human Developing Index and resource exploitation degree (RED) of 30 provinces in China (Tibet, Taiwan, Hong Kong and Macao were not included because of the restriction of data acquisition) was investigated by correlation coefficient analysis and regression analysis. We found that resource curse did exist over the entire country and its effect on 30 provinces were not exactly the same. According to the effects of resource curse, these provinces could be classified into four types: no resource curse provinces, slight resource curse provinces, severe resource curse provinces, and extreme resource curse provinces. Testing from two short time periods 2000–2005, and 2006–2011, the resource curse effect was not prominent. However, testing from the entire period of 2000–2011, the effect was obvious among each province.