Resource Curse Research Articles

Re-examining the curse of natural resources in SSA: New evidence from disaggregated natural resources and types of corruption

Understanding how corruption affects the relationship between natural resources and growth has profound implications for sustainable development goals in Sub-Saharan Africa (SSA). This study investigates the nexus between natural resources, economic growth, and corruption in SSA from 1985 to 2022, by employing a Panel Smooth Transition Regression model. Results indicate that corruption distorts natural resources and lowers economic growth. The magnitude of the effect of corruption depends on the type of corruption. The impact of political corruption is more relevant than the others form of corruption. In a low corruption regime, mineral, oil, and forest resources do not affect growth; (b) in a high corruption regime, oil and forest resources hinder growth whereas mineral resources lead to higher economic growth. The analysis highlights the need for policy measures that encourage sustainable economic development and promoting reinforcement of institutional quality.

Study on China’s Farmland–Grain resource curse: Empirical testing based on 31 Provinces and 2843 Counties

Food security is one of the largest concerns in the country, but in reality, it often presents an abnormal phenomenon of “abundant grain production with the poor economy”. Considering that the existing research on resource curse has hardly touched upon the topic of farmland and grain resources curse, and there is a lack of quantitative empirical analysis on the impact of farmland and grain resources abundance on regional economic development, this study uses an organic combination of provincial and county scales to analyze the spatial differences of the curse in China’s provinces and counties, carry out empirical testing of China’s farmland–grain resource curse based on panel data collected from 31 provinces in 2001–2021 and 2843 counties in 2014–2021, and revealed its influence mechanism by using the econometric model. The results suggest the following: (1) the curse of farmland and grain resources occurs to different degrees in more than 77 % of provinces and about 63 % of counties in China, and about 19 % of counties are at the serious and extremely serious levels. (2) The curse of farmland and grain resources occurs in regions with high grain output, and has a negative influence on regional economic growth. In terms of estimation results at the provincial level, for every 1 % increase in total cultivated land area, grain sowing scale, and total grain output, GDP will decrease by an average of 0.2344 %, 0.1699 %, and 0.1424 %, respectively. In terms of estimation results at the county level, for every 1 % increase in total grain output, GDP will decrease by an average of 0.0824 %. (3) The curse effect mainly comes from the main grain production areas, and the results show that in the county–level studies, for every 1 % increase in total grain output in main grain production areas, GDP will decrease by an average of 0.0889 %. Overall, the regression results of total grain output at the provincial and county scales are relatively similar. (4) The poverty degrees and grain output levels in counties show a superposition trend with the curse effect. (5) The resource curse is caused by the effect of inhibiting the process of urbanization, crowding out the other industries in the main grain production areas, as well as the restrictions on the use of farmland and the reduction of grain price, so the economic development of regions with high grain output is relative slow. Based on these observations, this study proposes countermeasures to break the curse.

Exploring the influencing factors of environmental deterioration: evidence from China employing ARDL–VECM method with structural breaks

PurposeThe environmental deterioration has become one of the most economically consequential and charged topics. Numerous scholars have examined the driving factors failing to consider the structural breaks. This study aims to explore sustainability using the per capita ecological footprints (EF) as an indicator of environmental adversities and controlling the resources rent [(natural resources (NR)], labor capital (LC), urbanization (UR) and per capita economic growth [gross domestic product (GDP)] of China.Design/methodology/approachThrough the analysis of the long- and short-run effects with an autoregressive distributed lag model (ARDL), structural break based on BP test and Granger causality test based on vector error correction model (VECM), empirical evidence is provided for the policies formulation of sustainable development.FindingsThe long-run equilibrium between the EF and GDP, NR, UR and LC is proved. In the long run, an environmental Kuznets curve (EKC) relationship existed, but China is still in the rising stage of the curve; there is a positive relationship between the EF and NR, indicating a resource curse; the UR is also unsustainable. The LC is the most favorable factor for sustainable development. In the short term, only the lagged GDP has an inhibitory effect on the EF. Besides, all explanatory variables are Granger causes of the EF.Originality/valueA novel attempt is made to examine the long-term equilibrium and short-term dynamics under the prerequisites that the structural break points with its time and frequencies were examined by BP test and ARDL and VECM framework and the validity of the EKC hypothesis is tested.

The resource curse in energy-rich regions: Evidence from China's ultra-high voltage transmission

Coordinating the energy mix transition with environmental protection is essential for reducing climate risks. Long-term fossil fuel exploitation and utilization result in increasing ecological risks in energy-rich regions. While ultra-high voltage (UHV) transmission is considered a key tool for promoting long-distance energy consumption, its ecological impact has received little attention. Using city-level panel data from 2005 to 2019 in China, this study examines the impact of UHV transmission on eco-environmental quality in energy-rich regions. The empirical results show that UHV transmission reduces eco-environmental quality in energy-rich regions. This effect is particularly pronounced in regions with more abundant fossil energy sources, underdeveloped economies, and weak environmental regulations. Mechanism analysis finds that UHV transmission promotes the expansion of power generation in energy-rich regions, followed by lagging industrial structure, weakening eco-environmental governance and intensifying resource exploitation. These findings suggest that increasing the utilization of renewable energy and strengthening environmental regulation are essential for achieving sustainable development in energy-rich regions.

Revisiting the resource curse: Does volatility matter?

AbstractCountries with abundant natural resources often possess greater wealth, yet the impact of these resources on economic growth remains unclear. This paper examines how natural‐resource abundance and its volatility impact economic growth. It questions whether natural resources themselves are a curse or if the negative growth effects are due to the volatility of natural‐resource revenues. The study also investigates how volatility of natural resources affects key economic growth channels, such as investment, human capital, and institutional quality. Using the standard panel model and panel smooth transition regression (PSTR), the paper analyzes data from 125 countries (1988–2020). Results show that natural‐resource abundance boosts economic growth, contradicting the resource‐curse theory. However, the growth impact is non‐linear and varies with natural‐resource volatility. Countries with high volatility face up to a 22 percentage point annual GDP growth loss compared with those with low volatility, suggesting that volatility and poor government responses drive the resource‐curse paradox, not the abundance of resources per se.

Revisiting the resource curse hypothesis from the viewpoint of green growth: The role of Fintech as the de-cursing agent

Conventionally, the resource curse hypothesis highlights the economic growth-inhibiting impacts that are often associated with the expansion of natural resource-based industries. However, not much focus has been given to assessing whether natural resource consumption hinders green growth establishment, as well. Hence, this study makes a novel attempt at evaluating the validity of the resource curse hypothesis from the viewpoint of green growth in the context of selected Sub-Saharan African countries. Notably, this study focuses on whether natural resource abundance upholds green growth in the concerned Sub-Saharan African nations, especially by reducing their annual carbon emission-adjusted economic growth levels. More importantly, this study ascertains whether Fintech development, via the channel of Fintech-based startup financing, can promote green growth in these countries and thereby act as a de-cursing agent for tackling the possible economic and environmental curses imposed by their natural resource sectors. Accordingly, by employing a recently developed two-stage instrumental variable regression method, the resource curse hypothesis is verified from the perspective of green growth establishment. On the other hand, Fintech development is found to not only promote green growth on its own but also act as a de-cursing agent that partially offsets the green growth-impeding effects associated with natural resource consumption. Furthermore, capital accumulation is identified as a green growth-restricting factor while institutional quality improvement is observed to stimulate green growth across the selected Sub-Saharan African countries. Therefore, considering these major findings, a couple of green growth-promoting policy suggestions are put forward.

The Impact of Renewable Energy Development on Regional Carbon Emission Reduction: Based on the Spatio-Temporal Analysis of 30 Provinces in China.

The development of renewable energy has become an important means for the world to cope with climate change, ensure energy security, and protect the ecological environment. Using the panel data of 30 provinces in China from 2013 to 2021, this study used the mediating effect model and the spatial Durbin model (SDM) to explore the mechanism and spatial effects of renewable energy development on China's regional carbon emission reduction. The results show that: (1) Renewable energy development can help to reduce carbon emission intensity. (2) The results of mechanism analysis show that renewable energy development reduces carbon intensity by improving energy structure, promoting industrial structure optimization, and industrial structure upgrading. (3) The development of renewable energy can not only reduce the local carbon intensity but also have a positive spillover effect on the carbon intensity of neighboring regions. (4) Further analysis shows that the long-term effect of renewable energy development on carbon emissions is greater than the short-term effect. At the same time, the heterogeneity analysis shows that compared with the Yellow River basin, the development of renewable energy has a significant carbon emission reduction effect in the Yangtze River Economic Belt region. Energy-rich areas fall into the "resource curse", which makes the carbon emission reduction effect of renewable energy development not significant. This paper has certain reference significance for promoting reasonable decomposition between regions and formulating renewable energy development policies.

Mineral resources policy with economic risk: Envisaging the role of mineral resources with inclusive financial development for the US economy

While previous research has thoroughly examined the influence of natural resources and economic growth on a global scale, there is a noticeable gap in the literature regarding analyzing the impact of mineral rents. This gap is significant and warrants attention due to mineral rents crucial role in renewable energy projects, its contribution to the promotion of mining activities, and its potential to influence regional stability. Hence, unlike previous studies, this research investigates the nexus of mineral rents and economic growth in the USA from 1984 to 2022. The research also incorporates the role of economic risk, financial development index, renewable energy consumption, and technological innovation. This research used time series methods encompass relevant parametric approaches, i.e., Fully modified OLS, Dynamic OLS and canonical cointegration regression for the unit root specifications in the data. For robustness, simple OLS with break years and robust OLS are deployed in the research to evaluate the robustness of estimated findings. The empirical outcomes assert that long-run equilibrium exists between economic progression and all its co-variates across models. The outcomes of linear and non-linear procedures based on the long-run association and quantile-based approach disclose that mineral rents established a resource curse hypothesis for economic growth. The increase in mineral rents by 1% causes a decrease in economic growth by -0.026% and -0.014% across all methods. Moreover, financial development index, renewable energy consumption, and technological innovation are found to induce economic progression in the long run. However, in contrast, economic risk is determined to decrease economic progression, but its outcomes are found to be insignificant in the long run across quantiles. The outcomes of robustness procedures provide a better understanding of supporting the main estimations through logical findings. In terms of policy implications, the research recommends channeling mineral resources to influence the real segments of the economy, i.e., economic progression. Moreover, the research encourages the promotion of multilevel financial development, renewable energy, and technological innovation to benefit from its influence on expanding sustainable economic progression.

Does fintech positively moderate the impact of mineral resources on green growth? Role of economic policy uncertainty in OECD economies

Resource curse remains a dilemma for the resource-endowed OECD countries, whereas consistent mineral resource utilization impedes green growth. However, fintech innovations are imperious in transforming the economic landscape and resource curse paradox. Therefore, our study elucidates the impact of Fintech, economic policy uncertainty (EPU), and mineral resource rents on green growth. For empirical exploration, the generalized method of moment (GMM) was employed from 2014 to 2022 in selected OECD countries. The empirical outcomes reveal that mineral resource rents hinder green growth, affirming the resource curse hypothesis. Similarly, EPU exerts negative impacts on green growth. On the other side, Fintech is a stimulator of green growth, demonstrating a positive linkage. The moderation covariates of fintech measures with the mineral industry have immense potential to reduce adverse economic effects and significantly promote green growth. The alternative estimator echoes identical findings with different magnitudes and signs to affirm estimated outcomes. This research suggests valuable policy implications for OECD economies to disseminate fintech adoption in curbing harmful economic uncertainty and resource erosion in the green transition.

Coupling efficiency and spatial dynamic evolution of urban water–energy–food in China–A case of evidence from 94 cities

Quantifying and interpreting the water–energy–food (WEF) nexus is critical to achieve the sustainable development of urban resources. The mismatch between urban water, energy and food allocations is a prominent problem that is particularly acute in the Yellow River Basin (YRB) of China. In this study, models for the WEF coupling degree and coupling efficiency were constructed. The WEF coupling efficiencies of the 94 cities in the YRB from 2011 to 2020 were quantified using a data envelopment analysis (DEA) model. On this basis, the spatial distribution characteristics and evolutionary trends of different urban WEF coupling efficiencies were analysed and explored using an exploratory spatial data analysis (ESDA) model and a parametric kernel density estimation model. The results show that the energy subsystem constrain the development of the WEF nexus, and the food subsystem, in turn, regulates the development of the WEF nexus. In some years, the phenomenon of ‘resource curse’ occurred, in which the WEF coupling degree increased while the coupling efficiency decreased. Overall, the values of the urban WEF coupling efficiency were low, ranging from 0.5300 to 0.6300, which is not effective. Spatial clustering was detected in the urban WEF coupling efficiency. The clustering types were ‘high–high’ clustering areas in less developed regions and ‘low–low’ clustering areas in developed regions. The two clusters and the median contiguous group had different evolutionary trends. Both efficiency and polarisation increased in the high-clustering group, efficiency improved in the low-clustering group, and a new efficiency pole was formed in the median contiguous group. Among the three grouped cities, we discuss the potential of policies such as cross-city cooperation, intra-city multi-sectoral cooperation and cultivating new central growth cities to improve the WEF coupling efficiency in the YRB.

How green investment significantly relieves resource curse? A new perspective from fiscal decentralization

Harsh weather, climate change, and pandemics have wreaked havoc on global economies. Evidently, green investment has become an imperative tool for realizing sustainable economic development in response to these calamities. This article adopts the regression discontinuity design (RDD) as well as stage heterogeneity influential mechanism analysis to study the nonlinear form and potential mechanisms of green investment in mitigating the ecological resource curse, based on provincial panel data of China from 2006 to 2020. The study findings indicate an inverted U-shaped curve in the linkage between green investment and pollution emission, with a turning point at 4.98. Moreover, the analysis of heterogeneity mechanisms reflects that local fiscal decentralization and resource dependence initially impede the effect of green investment on mitigating the ecological resource curse. Nonetheless, as green investment matures, the curse is primarily alleviated through substantive innovation in eco-friendly practices. By investigating the regional and resource endowment heterogeneity, it is obvious that inland and non-resource-based regions are more inclined to benefit from green investment in alleviating the environmental resource curse. Thus, this paper proposes certain policy recommendations tailored to regional characteristics, such as fostering a greener consumption mindset and minimizing industry reliance in resource-based zones.

Does export underreporting contribute to the resource curse?

Since the 1970s, resource-exporting countries have tended to develop more slowly, a phenomenon known as the resource curse. The literature suggests that governance problems and extractible resources exacerbate the curse by diverting talent, effort, and funds into conflict, corruption, and patronage. In this paper, I argue that another mechanism may be export underreporting and capital flight, which can reduce savings, fiscal revenues, and foreign exchange. I present an economic model of underreporting and show that primary export revenues, fiscal revenues, and GDP are 30–50 % less responsive to global commodity prices in autocratic countries. The effects are concentrated in extractive industries and not restricted to oil exporters. The facts that developing countries tend to tax the primary sector and the incentive to underreport should be larger in autocracies − where firms are less accountable to citizens − suggest that primary exports may be underreported, which might contribute to the resource curse.

Revisiting natural resources and economic complexity nexus: Does financial development matter in developing countries?

There is a large body of work documenting the non-consensual effects of natural resources on economic complexity. Despite this extensive literature, little is known about the mediating effect of financial development on the above relation. This paper focuses on assessing the effect of financial development on natural resources and economic complexity nexus. The study uses the System Generalized Method of Moments in a sample of one hundred (100) developing countries over the period of 1995–2020. The results show that natural resources reduce economic complexity; translating the curse of natural resources into economic complexity. However, financial development reduces this curse and thus improves the effect of natural resources on economic complexity. The results remain robust to several robustness and sensitivity tests.

Research on the impact of digital economy on green total factor productivity: theoretical mechanism and multidimensional empirical analysis

The digital economy (DE) is emerging as a crucial driver of economic growth and an effective tool for alleviating resource and environmental pressures, thereby evolving into a significant force in facilitating green transformation. This study elaborates on the theoretical mechanism of the impact of DE on green total factor productivity (GTFP), and conducts multidimensional empirical tests using panel data from 284 cities in China. The main findings are as follows: (1) DE exerts significant positive direct, indirect, and spatial spillover effects on GTFP, signifying its growing role as a robust driver of GTFP. Notably, technological innovation emerges as a key mediator of DE’s impact on GTFP. (2) The impact of DE on GTFP exhibits a distinct pattern: initially pronounced, gradually diminishing, and then rebounding as DE progresses. (3) DE tends to exacerbate, rather than alleviate, the development divide and resource curse, especially in underdeveloped and resource-rich cities where its benefits are constrained. (4) Government behavior is pivotal in influencing DE’s impact on GTFP. Supportive policies and strict environmental regulations are critical in harnessing DE’s positive contributions to GTFP. This study lays a scientific foundation for leveraging the “green attributes” of DE and offers insights into bridging the developmental disparities among cities.

Does natural resource dependence restrict green development? An investigation from the “Belt and road” countries

Addressing natural resource dependence is integral to achieving the Sustainable Development Goals by promoting economic diversification, environmental sustainability, and climate resilience. This study explores the effect of natural resource dependence on green development by adopting the balanced panel dataset from the “Belt and Road” countries from 2005 to 2019. Notably, the novelty of our analysis lies in the empirical analysis using instrument-based techniques that consolidate the “green development curse hypothesis” in the Belt and Road countries. The mechanism analysis reveals that natural resource dependence curbs green development by weakening innovative capability, disturbing institutional quality, reducing population density, and crowding out human capital. Further, the dynamic panel threshold model handling endogeneity verifies the nonlinear relationship between natural resource dependence and green development. Interestingly, digital trade offers greater “resilience” than traditional trade, correcting the resource curse dilemma. Finally, heterogeneity analyses indicate that the green development curse hypothesis only exists in countries with high-level environmental regulations and resource-based countries.

A re‐assessment of the Resource Curse Hypothesis in top resource‐rich developing countries: Fresh insights using method of moments quantile regression

AbstractWhether mineral and natural resources (NR) are a blessing or a curse for economic growth (ECON_G) is still a debatable issue among scholars and policymakers. Therefore, the primary goal of the present study is to investigate the relationship between mineral resources (MR), NR, and ECON_G to re‐assess the “Resource Curse Theory.” For this purpose, a panel of six top resource‐rich developing economies (China, Brazil, Russia, Iran, the Republic of the Congo, and Saudi‐Arabia) over the 1995 to 2021 period is analyzed using dynamic ordinary least square, fully modifies ordinary least square and method of moments quantile regression approaches. The basic findings of the above‐mentioned techniques reveal the significantly positive impact of both NR and MR on ECON_G in the selected economies. The estimation outputs of the method of moments quantile regression also reveal the significant positive contribution of these resources in ECON_G at all quantiles (0.10–0.90). Thus, the study finds that the Resource Bless Hypothesis is valid as both NR and MR support the absence of the Resource Curse Hypothesis in these countries. Furthermore, the findings of the Granger Causality test reveal that bidirectional causal association is present between NR and ECON_G and MR and ECON_G. The study recommends that policymakers and governments in the resource‐rich countries should promote the development of the mining sector and sustainable resource extraction by properly monitoring the resource sector. More importantly, implementing resource governance initiatives are needed to be prioritized for transforming resources as a blessing for the studied countries.

Africa’s critical minerals can power the global low-carbon transition

The global shift towards low-carbon economies and societies is expected to result in a substantial surge in the demand for critical minerals. Endowed with at least a fifth of the world’s reserves in a dozen minerals, Africa can play a pivotal role in facilitating the global transition away from fossil fuels. In this paper, we argue that, for this to happen, Africa needs to act now to convert its natural assets into sustainable comparative advantages for a resource-based industrialisation. This will require proactive measures to ensure strict compliance with the highest standards of governance and transparency, as well as to uphold social values such as safeguarding basic rights of affected individuals and communities and sound environmental management to avoid falling into a new resource curse. This also requires a renewed global raw material diplomacy in which Africa manages the geopolitics of critical minerals, identifying strategic global alliances to unleash economic potential, create local content in the mining sector, develop domestic productive capacity, and foster sustainable development.

Resource booms and the energy transition: What can we learn from Dutch economists' response to the discovery of natural gas reserves (1959–1977)?

Geopolitical instability and climate change are about to bring about large-scale energy reconfigurations. Recent discoveries of fossil fuel potential echo important historical episodes, starting with the finding of natural gas reserves in the Netherlands in 1959, which gave birth to the notion of Dutch Disease, in reference to the macroeconomic structural readjustments that followed the resource boom. Recently, the economic literature on whether such a boom might be a blessing or a curse for a country has been growing. What has not received attention so far is the attitude of Dutch economists in the 1960s and 1970s and the lessons to be drawn from them in today's economic research. This article explores how they understood the gas boom, how they anticipated its effects, and the role they played in shaping Dutch energy policies. We show that the 1960s were a parenthesis, and that energy optimism has historically been more an exception than a rule. In situ economists correctly anticipated some but not all of the transmission channels of the resource boom. These results are insightful for the 21st century, as they not only allow for historicizing the concept of the resource curse but also provide lessons for macroeconomic policies in the context of the energy transition, especially in countries endowed with fossil fuels and mineral resources.

Does industrial sustainable development policy act as a booster for urban economic growth? Evidence from China's eco‐industrial parks

AbstractEco‐industrial parks (EIPs), which reduce pollution and transform the industrial sector to be more environmentally benign, represent the industrial sustainable development policy. However, little research has concentrated on its economic effects. We explore the impacts of 93 national demonstration EIPs on urban economic development using time‐varying difference‐in‐difference, based on panel data from 330 Chinese cities from 1995 to 2018. We show that EIPs have contributed to an economic growth range between 7.47% and 7.61% in pilot cities, with robustness considering price deflators and alternative satellite data on night lights. Structure, technological, and scale effects help explain the mechanisms. Further estimates show that EIPs have had mixed success in addressing the resource curse, where they only alleviate the curse for growing resource‐based cities. We argue that the industrial sustainable development policy not only conveys significant economic benefits but also holds the potential to address the resource curse.

Quantifying the Impact of Natural Resources on Sustainable Growth in Developing Economies: Evidence from Panel Nonlinear ARDL Technique

The main purpose of current research is to analyze the impact of natural resource exploration on sustainable growth in developing economies. Annual panel data of 57 developing countries from 2000 to 2021 has been used for research analysis. First, this study uses a simple Panel Autoregressive Distributive Lag (ARDL) estimation technique to examine the long-run and short-run link among the variables. The results depict that in the long run natural resource exploration has a significant negative impact on sustainable growth. This finding supports the presence of the resource curse hypothesis. Besides this, the present study decomposes the policy variable (mining contribution index) into its two shocks i.e. positive shock and negative shock by applying a panel non-linear ARDL approach. The long-run outcomes depict that both the coefficients of partial positive and partial negative sums of natural resource rents are negative and significant. Furthermore, the research outcomes explain that financial openness and international trade have a substantial and positive impact on sustainable progress. The policy implications for current research are to avoid bad rent-seeking behaviors and to escape from non-productive activities to achieve sustainable development. Furthermore, there is a dire need to adopt and support environmentally friendly policies.