Resource Curse Research Articles

Exploring impact of green finance and natural resources on eco-efficiency: case of China

China ranks 160 out of 180 countries in terms of ecological efficiency, with an EPI score of 28.40 and a 10-year average change in score of 11.40. This article examines the impact of green finance and China’s natural resources on regional ecological efficiency using the Tobit regression model. The study uses the average yearly exchange rate to normalize dollar-related values and GDP to 2012 RMB using the price deflator. Variables used as explanatory tools include green financing, the availability of natural resources, and regional eco-efficiency. The results of the study imply that natural resources in eastern region of China are better managed as and have avoided the resource curse as compared to central and western regions. Resources temporarily support area economic and social growth. However, resource agglomeration locks many elements in the resource industry and degrades regional industrial development, generating environmental and social difficulties that may hinder regional economic progress. Given that Foreign Direct Investment (FDI) increases regional eco-efficiency after accounting for adjustment. The FDI positively correlated with ecological efficiency in the east zone, while central and western zones have negative correlations. The industrial development of the nation negatively impacts ecological efficiency in the East, Midwest, and West regions. Western results are distinctive, with ecological efficiency and regional economic growth frequently going hand in hand.

From Resource curse to digital economy Harmony in selected Belt and Road countries

This study explores how the digital economy affects the resource curse in Belt and Road Initiative (BRI) countries. Using data from 27 BRI nations (2001–2020) and fixed effect panel data analysis, we find that increased digital access and technology imports reduce resource dependency. Specifically, a 1% rise in computers per 100 inhabitants correlates with a 0.17% decrease in oil rent, indicating digital access aids economic diversification. Conversely, a 1% increase in internet access tariffs leads to a 0.29% rise in oil rent, impeding diversification. Additionally, a 1% increase in ICT goods imports results in a 0.64% decrease in oil rent. Positive coefficients for electricity consumption and population size suggest intensified resource curse effects. We recommend policies to enhance digital accessibility and technology imports, improve electricity infrastructure, and promote renewable energy sources to mitigate the resource curse in BRI countries.

The impact of natural resource dependency on green economic growth: A business environment perspective

Transforming the “resource curse” into a “resource blessing” is crucial for achieving sustainable development goals. This paper develops business environment indicators using ecosystem theory to examine the influence of natural resource reliance on green economic growth from a business environment perspective. The empirical study is based on panel data analysis of 266 Chinese cities from 2012 to 2021. The results show that the business environment and its sub-dimensions financial environment, market environment, and political and legal environment can weaken the inhibitory effect of natural resource dependence on green economic growth, and robustness and endogeneity analyses are conducted. Further, the threshold regression reveals that the business environment and its sub-dimensions of financial environment can turn the “resource curse” into “resource blessing” after reaching the threshold value. Finally, heterogeneity analysis reveals that the same policy has varying regulatory effects in resource-based versus non-resource-based cities.

The Effect of Multilateral Economic Cooperation on Sustainable Natural Resource Development

The relationship between natural resource development and sustainable development has long been a focus in academia. In the context of a new global economic cooperation system, many scholars argue that such cooperation can lead to a “resource curse” effect in partner countries, hindering their sustainable development. This study analyzed panel data from 64 countries from 2008 to 2020, using the Belt and Road Initiative as a representative of multilateral economic cooperation (MEC) policies. The aim was to examine the actual impact of multilateral economic cooperation on the sustainable development levels of partner countries and to explore the underlying mechanisms influencing these outcomes. First, we measured and identified the sustainable development index (SDI) under natural resource development schemes and the “resource curse” effect in these countries. Then, we employed a double machine learning approach to evaluate the policy effects of MEC on sustainable resource development. We constructed an interactive double machine learning model to examine and validate the specific mechanisms of resource development effects. The results indicate that the level of sustainable resource development in MEC countries is relatively low, and a “resource curse” effect already exists. However, participating in MEC suppresses this “curse” effect. By promoting innovation cooperation, institutional improvement, structural optimization, trade openness, and pollution reduction, MEC effectively enhances the sustainable development levels of partner countries.

Environmental Regulation, Factor Marketisation Allocation and Carbon Emissions Performance: Empirical Evidence from Resource-Based Cities in China

Resource-based cities had an irreplaceable role in the process of the economic miracle in China. Advancing such cities’ carbon emissions reduction is a crucial aspect of the country’s steady realisation of the dual carbon peak and neutrality strategy. The reasonable implementation of environmental regulation and the efficiency of factor marketisation allocation are the key links for resource-based cities to improve carbon emissions performance, break the resource curse and reduce carbon emissions. Based on this, this study centres on the driving relationship between environmental regulation, the efficiency of factor marketisation allocation and carbon emissions performance as the core research problem. This study takes the panel data of 116 resource-based cities in China from 2006 to 2020 as the research sample; the non-radial meta-frontier total factor carbon emissions performance index is selected as the measurement index of carbon emission performance of resource-based cities based on the applicability analysis of the model. This study explores the characteristics of regional heterogeneity and type heterogeneity of carbon emissions performance driven by environmental regulation under the moderating effect of the efficiency of factor marketisation allocation and further explores the threshold effect, aiming to clarify the driving relationship between the three. The findings reveal that the driving effect of environmental regulation intensity on carbon emissions performance exhibits a fluctuating upward trend, the effect transformed by compliance cost and innovation compensation. The efficiency of factor marketisation allocation has a double threshold superposition effect on carbon emissions performance fluctuation that is driven by environmental regulation, indicating that market and government effectiveness can operate together to improve the carbon emissions performance. Based on these results, this study proposes countermeasures and suggestions for improving carbon emissions performance using environmental regulation and the efficiency of factor marketisation allocation.

Financial resource curse and firms' accessibility to financing in resource-based countries

This study delves into the paradox of the financial resource curse, exploring how the abundance of natural resources in a country paradoxically constrains firms' accessibility to financing. Despite the potential economic boon natural resources represent, evidence suggests that they can lead to less diversified economies, making it challenging for firms outside the resource sector to access financing. Our research aims to dissect this phenomenon by analyzing microeconomic statistics on the financial accessibility of enterprises, juxtaposed with macroeconomic statistics across 170 countries, encompassing over 10,000 firms surveyed from 1990 to 2022. The panel regression analysis allows us to control for both time-invariant country characteristics and global economic trends, providing insights into the causal relationship between resource dependence and financial access for firms. The results are striking, revealing that, indeed, countries with significant natural resource wealth tend to exhibit reduced financial accessibility for firms outside the resource extraction sector. The panel regression models indicate a robust negative correlation between the extent of a country's resource wealth and the ease with which non-resource firms can access financial capital. This suggests that the financial resource curse is not only a real phenomenon but also one that has significant implications for economic diversification and sustainable development. Moreover, findings underscore the need for targeted policy interventions. Countries with abundant natural resources should implement strategies that foster economic diversification, enhance the financial infrastructure to support a broader range of industries, and encourage the development of financial instruments tailored to the needs of non-resource sectors.

Do government environmental target constraints break the political resource curse? --A study on political connections and firm green innovation

This study combines government environmental target data (2003–2015) with green innovation among listed firms of China. After investigating the relationship between political connections and firm green innovation, we focus on whether government environmental target constraints can break the political resource curse and enhance green innovation. The findings suggest the existence of a political resource curse in firm green innovation. However, government environmental target constraints effectively mitigate this curse, increasing the quantity of green innovation in firms with political connections but at the expense of a decline in quality of green innovation. We further conduct a robustness analysis using data from 2003 to 2021, and the research findings remain consistent. Mechanism analysis indicates that government environmental target constraints effectively boost the quantity of green innovation in politically connected firms by reducing rent-seeking costs and increasing R&D subsidies. Simultaneously, government environmental target constraints amplify financial constraints, subsequently squeezing high-quality inputs for green innovation and resulting in a decline in quality. Furthermore, the intensity of government environmental regulation influences the relationship between political connections and green innovation in a non-linear way. When the intensity of government environmental regulation is high, it motivates politically connected firms to increase the quantity of green innovation but at the cost of reduced quality. Heterogeneity analysis also reveals diverse impacts of government environmental target constraints on green innovation in firms with political connections, considering factors such as levels and types of political connections, green innovation, social attention, industries, regional economic growth pressure, and market conditions.

Sustainability education and resource curse control in the selected resource-rich economies

The “resource curse” paradoxically impacts countries abundant in natural resources, presenting challenges despite their apparent benefits. In 20 such economies, the focus has shifted to using sustainability measures to address this curse, analyzed through Cross-Sectional Fully Modified Ordinary Least Squares. Between 1999 and 2018, sustainable education proved essential in mitigating resource curse vulnerabilities. For instance, a 1% rise in primary school enrollment correlates with a 0.16 decrease in the Resource Curse Vulnerability Index, aiding economic diversification. Similarly, a 1% increase in state education investment leads to a 0.54% reduction in the index, improving human capital and governance. However, higher inflation exacerbates vulnerability, while trade liberalization reduces dependence on resources. Increased electricity consumption and internet access may intensify risks. Effective policies should focus on increasing education investment, supporting Education for Sustainable Development, enhancing media advocacy, promoting renewable energy, and advancing sustainable digital transformation.

The financial resource curse: Interest rate deregulation and firms' shadow banking activities

AbstractBy exploiting China's 2013 interest rate deregulation, we analyse whether the financial resource curse exists. The results show that after the deregulation, low‐risk firms with more credit resources engage in more shadow banking activities, which preliminarily confirms the existence of the financial resource curse. Moreover, this effect is pronounced in firms located in regions with high credit marketisation and firms with bank connections. However, this effect is weakened in firms with strong internal governance and external supervision, and SOEs. Finally, additional analyses reveal that active participation in shadow banking activities hinders low‐risk firms' long‐term growth, and receives unfavourable market feedback.

The role of governance and infrastructure in moderating the effect of resource rents on economic growth

AbstractThis study investigates how governance and infrastructure moderate the effect of natural resource rents on economic growth using a sample of 110 countries from 2000 to 2018. The empirical evidence is based on panel smooth transition regressions (PSTR). The nexus between economic growth and natural resources is not linear and the underlying non‐linearity is contingent on existing infrastructural and governance levels. Evidence of a “natural resource curse” is apparent in countries with extremely low levels of governance and infrastructural development. The favorable effect of natural resources on economic growth requires a governance threshold of −1.210 and an infrastructure threshold of 2.583, indicating that countries with governance and infrastructure levels higher than these values tend to benefit much more from the wealth of natural resources. Countries identified below the established thresholds are mainly from Africa. Policy implications are discussed with specific emphasis on African countries.Related ArticlesAli, Hamid E., and Shahjahan Bhuiyan. 2022. “Governance, Natural Resources Rent, and Infrastructure Development: Evidence from the Middle East and North Africa.” Politics & Policy 50(2): 408–40. https://doi.org/10.1111/polp.12451.Asiegbu, Martin F., Okey Marcellus Ikeanyibe, Pius Otu Abang, Okwudili Chukwuma Nwosu, and Chuka Eugene Ugwu. 2024. “Natural Resource Fund Governance and the Institutionalization of Rent Seeking in Nigeria's Oil Sector.” Politics & Policy 52(1): 169–95. https://doi.org/10.1111/polp.12579.Ikeanyibe, Okechukwu M. 2018. “Bureaucratic Politics and the Implementation of Liberalization Reforms in Nigeria: A Study of the Unbundling and Reorganization of the Nigerian National Petroleum Corporation.” Politics & Policy 46(2): 263–94. https://doi.org/10.1111/polp.12249.

The driving factors of economic growth divergence in resource-rich countries

Growth divergence in resource-rich countries extends the debate over the resource curse hypothesis. The present study examines the relationship between natural resources and economic growth and its transmission channel, with panel data from 95 countries and between 1970 and 2017. It applies two different models such as Panel CS-ARDL and System-GMM to obtain a robust result of the relationship between natural resources and economic growth. The novelty of this study lies in the fact that it attempts to explain the growth divergence in resource-rich countries by examining the impact of natural resources on economic growth and its transmission channels for each per capita income group. CS-ARDL model does not confirm the results from system-GMM, which indicates the existence of resource curse for the panel of all countries. The other results from CS-ARDL support the evidence for the resource curse only in the low income countries and the blessing hypothesis in the developed ones. Low investment and poor total factor productivity are shown to be among the transmission channel of the negative impact of natural resource on economic growth in the developing country.

Examining the environmental consequences of China's mineral wealth and governance in the context of the natural resource curse

This study investigates the environmental consequences of China's mineral wealth and governance within the framework of the natural resource curse. The natural resource curse posits that countries rich in natural resources often experience less economic growth and worse development outcomes than countries with fewer natural resources. This phenomenon is particularly relevant for China, which has experienced significant mineral wealth since the 1990s. The primary aim of this research is to assess how China's mineral wealth and governance structures have influenced environmental outcomes from 1990 to 2022, using an econometric model. The results reveal three key findings: First, regions with higher mineral wealth have experienced more severe environmental degradation, particularly in terms of air and water pollution. Second, governance quality plays a critical role in moderating these effects, with better governance associated with less environmental harm. Third, economic growth driven by mineral wealth does not necessarily translate into improved environmental conditions, highlighting a disconnect between economic and environmental objectives. The policy implication is clear: to mitigate the environmental consequences of mineral wealth, China must strengthen its governance mechanisms and integrate environmental considerations into its resource management strategies.

Natural resources and economic growth: Examining the role of globalization, financial development, and digitalization in India

Natural resources are considered vital for economic growth, laying the foundations for various industries. Therefore, the present study aims to examine the importance of natural resources, globalization, financial development, and digitalization in India's economic performance from 1970 to 2020. The study utilizes the Auto-regressive distributed lag (ARDL) techniques with structural breaks and the Granger causality test to detect the direction of causality. Further, Fully Modified Ordinary Least Square (FMOLS) and Dynamic Ordinary Least Square (DOLS) were used to check the robustness of the long-run coefficients. The finding supports the “Resource curse hypothesis” in India. Globalization and financial development drive the long-run growth performance. In the short run, digitalization and globalization enhance growth performance. The Granger causality result unfolds a bidirectional causal relationship between economic growth and digitalization and unidirectional causation from financial development and globalization to economic growth. The study's outcomes have notable policy implications that emphasize the need to induce financial development, integrate digital technology into core sectors of the economy, and encourage market openness and efficient utilization and management of natural resources for sustainable economic growth.

Political culture and the resource curse: public sector corruption across the United States

Purpose This study aims to examine the connection between political culture and public sector corruption, using the typology of Daniel Elazar, whose model traces the types of political cultures to their origins in various regions of England. Similarly, the “resource curse” concept, generally treated as a national-level phenomenon, is examined to assess how it might vary among jurisdictions within a country. Design/methodology/approach Regression analysis was applied to data from the 50 states of the US. Public sector corruption in each state was operationalized as the number of convictions by the Public Integrity Section of the US Department of Justice in relation to the number of public sector employees in that state. Findings Among the 50 states of the US, support was found for the association between political culture and public sector corruption. On the other hand, whether a state’s economy was dominated by natural resource extraction was not related to public sector corruption. This latter finding suggests the “resource curse” phenomenon does not cause corruption to be worse in states with resource-dependent economies. Research limitations/implications Although it is appropriate to apply regression analysis to a data set of the 50 US states, the small size of the data set limited the number of predictor variables that could be examined. Alternative research approaches are discussed, and it is conceivable that another analytical technique might have revealed other predictors that affect the occurrence of corruption. Originality/value While numerous studies have examined the impact of political culture and resource orientation on corruption at the national level, the current study examines how these variables affect corruption at the level of subnational jurisdictions within a major developed country, the United States.

Exploring resource blessing hypothesis within the coffin of technological innovation and economic risk: Evidence from wavelet quantile regression

In contemporary times, the interrelationship between financial development and natural resources remains ambiguous in research findings. Some studies support the concept of a resource curse, while others confirm the idea of a resource blessing. Therefore, we clarify the resource blessing/curse hypothesis by considering the role of technological progress and economic risk. The study employed data spanning from 1985/q1 to 2020/q4. Given the non-linear distribution of the data, we employ innovative wavelet quantile regression. Unlike traditional quantile regression, wavelet quantile regression allows for identifying interrelationships between series across various quantiles and periods. Additionally, we utilized quantile ADF and quantile PP to assess the stationarity characteristics of the series, with quantile-on-quantile regression serving as a robustness check for wavelet quantile regression. The results of wavelet quantile regression indicate a significant positive impact of natural resources on financial development in the long-term, supporting the resource blessing hypothesis. Furthermore, empirical evidence reveals that both technological advancement and economic risk contribute significantly to sustained financial development over the long term. The findings of quantile-on-quantile regression align with the outcomes of wavelet quantile regression, reinforcing the robustness of the results. In light of these results, we put forth policy recommendations.

How does implementing the Extractive Industries Transparency Initiative (EITI) affect economic growth? Evidence from developing countries

Although there is no consensus on the relationship between natural resource abundance and economic growth, much of the economic literature suggests that natural resource abundance negatively affects economic growth in developing countries, leading to the resource curse theory. This situation led the international community to create the Extractive Industries Transparency Initiative (EITI) in 2003 to promote the effective contribution of natural resources to economic growth through a process involving governments, extractive industries, and civil society. Considering 99 developing countries from 1995 to 2019 and applying recent heterogeneity-robust difference-in-differences (DID) estimators, we find a positive and statistically significant relationship between EITI implementation and economic growth. Several robustness checks support this result. Most interestingly, the analysis of EITI’s dynamic effects reveals that these effects occur only in the short and medium terms. In addition, we tested several potential transmission channels and identified the increase in foreign direct investment and the rise in resource revenue as the main transmission channels. Moreover, we postulate and investigate four possible explanations behind the EITI’s mixed results on long-term growth: the lack of evidence of a negative relationship between natural resource abundance and long-term economic growth over the study period, a possible increasing reliance on non-resource taxes, a possible signaling effect targeted by member countries, and the lack of effect of EITI implementation on reducing corruption. Finally, the document provides economic policy recommendations for better governance in the management of natural resources in order to increase their contribution to development financing. Furthermore, improving governance in managing critical minerals is vital to avoid a “new curse of critical minerals”.

Breaking the resource curse: The impact of digital economy on the sustainable transformation of resource-based cities

Resource-based cities (RBCs) depend heavily on the extraction and processing of natural resources, resulting in relatively simple economic structures. However, the rise of the digital economy (DIGITAL) presents numerous opportunities for economic diversification and sustainable development. Further investigation is necessary to explore DIGITAL's potential to overcome the resource curse. This study examined the influence of digital economic development on the sustainable transformation of 115 RBCs in China from 2011 to 2019. Robustness and heterogeneity tests were conducted to ensure reliability of the findings. This study concluded that DIGITAL plays a pivotal role in driving the sustainable transformation of resource-based cities (STRBC). This conclusion was supported by various robustness tests. Urban economic efficiency and the vitality of innovation and entrepreneurship were identified as key channels through which DIGITAL contributes to STRBC. Moreover, governmental environmental concern can enhance DIGITAL's role in promoting STRBC. Furthermore, DIGITAL is particularly crucial for mature, declining, and regenerating cities, and has a stronger impact on cities with larger spatial scales. This may be attributed to factors such as the levels of economic development, infrastructure construction, and policy support in these regions.

Cyclicality of public debt in developing countries: Does dependence on natural resources matter?

We revisit the resource curse theory, producing empirical evidence of the importance of natural resources on the cyclical orientation of public debt. Using the Driscoll-Kraay fixed-effects method and panel data from 51 developing countries for the period 1986 to 2020, we show that natural resource rents accentuate the procyclicality of public debt. However, our results suggest that the impact of natural resource endowment in procyclicality does not have the same magnitude when taking into account (i) the disaggregation of public debt, (ii) alternative measures of natural resource rent and (iii) the division of the sample into African and non-African countries. More specifically, natural resource rents amplify the procyclicality of external public debt more than domestic public debt. In addition, we find that while coal and forest rents have no effect on the cyclical orientation of public debt, mineral and especially oil rents do amplify the procyclical nature of public debt. Finally, our results show that the accentuation of the procyclical nature of public debt generated by the interaction between the economic cycle and natural resource endowment is more pronounced in African developing countries than in non-African developing countries. Our results shed new light on the Dutch disease hypothesis, and have relevant policy implications for governments in resource-rich countries wishing to move towards counter-cyclical fiscal interventions.

Echoes of dependency: The impact of resource reliance on green industry transformation in China

The "resource curse" has garnered significant academic attention, yet a consensus on its causes remains elusive. This article addresses this gap by empirically examining the impact of resource industry dependence on the green transformation of manufacturing corporations (GTM), based on a precise measurement. The study identifies the effect mechanism of the "resource curse" from both macro (city) and micro (enterprise) dimensions. The findings indicate that resource industry dependence significantly hampers the GTM corporations, substantiating the "resource curse" effect. Moreover, this effect is particularly pronounced in western regions, resource-based areas, and regions with well-developed transportation infrastructure. Mechanism analysis reveals that, at the macro level, resource industry dependence stifles technological innovation, weakens market competition, and diminishes credit availability and government investments in technology for manufacturing corporations, impeding their green transformation. At the micro level, resource industry dependence impedes the GTM through reduced total factor productivity, weakened profitability, reduced scale, and increased pollution. Based on these findings, the article proposes various measures to facilitate green technological progress, optimize credit allocation, improve the business environment, and enhance technology investment at the macro level. At the micro level, measures are suggested to foster internal motivation, enhance profitability, expand the scale, and control emissions. By offering empirical evidence and policy insights, this article promotes the GTM corporations and establishes a solid micro foundation for High-quality development.

Exploring the nexus of geopolitical risk, green financing, and natural resource rents: A study of Russia's economic growth

Geopolitical risk encompasses various uncertainties arising from political, social, and economic factors, which can significantly influence a country's economic performance. Therefore in this study we analyzed the impact of geopolitical risk (GPR), green financing, and natural resource rents (NRR) on Russia's economic growth during 2000–2022 is examined in this study. The collected data is analyzed using simple quantile regression, the ADF unit root test, Johansen Co-integration, and other time series methods. A unit root test shows that level (1) data is stable and that variables are co-integrated. Quantile regression research shows that GPR positively impacts economic growth at the median and higher quantiles. In addition, green finance and commerce boost economic growth across all quantiles. The results support the resource curse hypothesis, which claims that NRR negatively affects economic growth. The Granger causality test shows that GDP and its explanatory components are causally related. These findings were compatible with quantile regression estimates after a parametric examination. The policy implications for researchers and politicians concerned with green finance, natural resource sustainability, and geopolitical dangers to economic growth are significant.