IDEAS home Printed from https://ideas.repec.org/a/eee/jrpoli/v78y2022ics0301420722002653.html
   My bibliography  Save this article

Natural resources rents, capital formation and economic performance: Evaluating the role of globalization

Author

Listed:
  • Li, Ying
  • Tariq, Muhammad
  • Khan, Saleem
  • Rjoub, Husam
  • Azhar, Aisha

Abstract

In recent decades, natural resources have been regarded as an important factor for the economic performance of the countries. However, developed economies are more recognized for better Globalization and the use of renewable Energy. This study aims to analyze the influence of natural resources rents, Globalization, renewable energy consumption, and gross capital formation on the economic performance of the group of seven economies over the period 1990–2020. This study used panel data specifications such as slope heterogeneity and cross-section dependence. Also, this study used the second-generation unit root test, which confirms the stationarity of all variables. All the variables are found in the long-run cointegration relationship but hold the property of non-normality. Hence, this study uses a novel Method of Moments Quantile Regression. The estimated outcomes asserted that natural resources rents, Globalization, and gross capital formation positively and significantly impact economic performance in all (Q0.25, Q0.50, Q0.75, and Q0.85) quantiles. At the same time, renewable energy consumption adversely affects the panel economies' economic performance. Moreover, there are bidirectional causalities between the explanatory variables and economic performance. On the basis of empirical findings, this study recommends policies regarding the sustainable use of the natural resource, increased Globalization, gross capital formation, and revised policies for renewable energy consumption.

Suggested Citation

  • Li, Ying & Tariq, Muhammad & Khan, Saleem & Rjoub, Husam & Azhar, Aisha, 2022. "Natural resources rents, capital formation and economic performance: Evaluating the role of globalization," Resources Policy, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:jrpoli:v:78:y:2022:i:c:s0301420722002653
    DOI: 10.1016/j.resourpol.2022.102817
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301420722002653
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.resourpol.2022.102817?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Topcu, Ebru & Altinoz, Buket & Aslan, Alper, 2020. "Global evidence from the link between economic growth, natural resources, energy consumption, and gross capital formation," Resources Policy, Elsevier, vol. 66(C).
    2. Lingui Qin & Syed Raheem & Muntasir Murshed & Xu Miao & Zeeshan Khan & Dervis Kirikkaleli, 2021. "Does financial inclusion limit carbon dioxide emissions? Analyzing the role of globalization and renewable electricity output," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(6), pages 1138-1154, November.
    3. Majeed, Abdul & Wang, Lijun & Zhang, Xiaohui & Muniba, & Kirikkaleli, Dervis, 2021. "Modeling the dynamic links among natural resources, economic globalization, disaggregated energy consumption, and environmental quality: Fresh evidence from GCC economies," Resources Policy, Elsevier, vol. 73(C).
    4. Erum, Naila & Hussain, Shahzad, 2019. "Corruption, natural resources and economic growth: Evidence from OIC countries," Resources Policy, Elsevier, vol. 63(C), pages 1-1.
    5. Ahmed Atil & Kishwar Nawaz & Amine Lahiani & David Roubaud, 2020. "Are natural resources a blessing or a curse for financial development in Pakistan? The importance of oil prices, economic growth and economic globalization," Post-Print hal-03676031, HAL.
    6. Emrah Ismail Cevik & Durmuş Çağrı Yıldırım & Sel Dibooglu, 2021. "Renewable and non-renewable energy consumption and economic growth in the US: A Markov-Switching VAR analysis," Energy & Environment, , vol. 32(3), pages 519-541, May.
    7. Narayan, Paresh Kumar & Smyth, Russell, 2008. "Energy consumption and real GDP in G7 countries: New evidence from panel cointegration with structural breaks," Energy Economics, Elsevier, vol. 30(5), pages 2331-2341, September.
    8. Nawaz, Kishwar & Lahiani, Amine & Roubaud, David, 2019. "Natural resources as blessings and finance-growth nexus: A bootstrap ARDL approach in an emerging economy," Resources Policy, Elsevier, vol. 60(C), pages 277-287.
    9. Shahbaz, Muhammad & Raghutla, Chandrashekar & Chittedi, Krishna Reddy & Jiao, Zhilun & Vo, Xuan Vinh, 2020. "The effect of renewable energy consumption on economic growth: Evidence from the renewable energy country attractive index," Energy, Elsevier, vol. 207(C).
    10. Baz, Khan & Cheng, Jinhua & Xu, Deyi & Abbas, Khizar & Ali, Imad & Ali, Hashmat & Fang, Chuandi, 2021. "Asymmetric impact of fossil fuel and renewable energy consumption on economic growth: A nonlinear technique," Energy, Elsevier, vol. 226(C).
    11. Jorg Breitung, 2005. "A Parametric approach to the Estimation of Cointegration Vectors in Panel Data," Econometric Reviews, Taylor & Francis Journals, vol. 24(2), pages 151-173.
    12. Chopra, Ritika & Magazzino, Cosimo & Shah, Muhammad Ibrahim & Sharma, Gagan Deep & Rao, Amar & Shahzad, Umer, 2022. "The role of renewable energy and natural resources for sustainable agriculture in ASEAN countries: Do carbon emissions and deforestation affect agriculture productivity?," Resources Policy, Elsevier, vol. 76(C).
    13. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    14. Joakim Westerlund, 2007. "Testing for Error Correction in Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(6), pages 709-748, December.
    15. Machado, José A.F. & Santos Silva, J.M.C., 2019. "Quantiles via moments," Journal of Econometrics, Elsevier, vol. 213(1), pages 145-173.
    16. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    17. Liang, Jinhao & Razzaq, Asif & Sharif, Arshian & Irfan, Muhammad, 2022. "Revisiting economic and non-economic indicators of natural resources: Analysis of developed economies," Resources Policy, Elsevier, vol. 77(C).
    18. Guan, Jialin & Kirikkaleli, Dervis & Bibi, Ayesha & Zhang, Weike, 2020. "Natural resources rents nexus with financial development in the presence of globalization: Is the “resource curse” exist or myth?," Resources Policy, Elsevier, vol. 66(C).
    19. Pesaran, M. Hashem & Vanessa Smith, L. & Yamagata, Takashi, 2013. "Panel unit root tests in the presence of a multifactor error structure," Journal of Econometrics, Elsevier, vol. 175(2), pages 94-115.
    20. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    21. Asif, Muhammad & Khan, Khan Burhan & Anser, Muhammad Khalid & Nassani, Abdelmohsen A. & Abro, Muhammad Moinuddin Qazi & Zaman, Khalid, 2020. "Dynamic interaction between financial development and natural resources: Evaluating the ‘Resource curse’ hypothesis," Resources Policy, Elsevier, vol. 65(C).
    22. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    23. Murillo Campello & Antonio F. Galvao & Ted Juhl, 2019. "Testing for Slope Heterogeneity Bias in Panel Data Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(4), pages 749-760, October.
    24. Namahoro, Jean Pierre & Wu, Qiaosheng & Xiao, Haijun & Zhou, Na, 2021. "The asymmetric nexus of renewable energy consumption and economic growth: New evidence from Rwanda," Renewable Energy, Elsevier, vol. 174(C), pages 336-346.
    25. Ocal, Oguz & Aslan, Alper, 2013. "Renewable energy consumption–economic growth nexus in Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 28(C), pages 494-499.
    26. Yung-Hsiang Ying & Koyin Chang & Chen-Hsun LEE, 2014. "The Impact of Globalization on Economic Growth," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 25-34, June.
    27. Chen, Chaoyi & Pinar, Mehmet & Stengos, Thanasis, 2020. "Renewable energy consumption and economic growth nexus: Evidence from a threshold model," Energy Policy, Elsevier, vol. 139(C).
    28. Yasmeen, Humaira & Tan, Qingmei & Zameer, Hashim & Vo, Xuan Vinh & Shahbaz, Muhammad, 2021. "Discovering the relationship between natural resources, energy consumption, gross capital formation with economic growth: Can lower financial openness change the curse into blessing," Resources Policy, Elsevier, vol. 71(C).
    29. Soytas, Ugur & Sari, Ramazan, 2003. "Energy consumption and GDP: causality relationship in G-7 countries and emerging markets," Energy Economics, Elsevier, vol. 25(1), pages 33-37, January.
    30. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    31. Michael Takudzwa Pasara & Rufaro Garidzirai, 2020. "Causality Effects among Gross Capital Formation, Unemployment and Economic Growth in South Africa," Economies, MDPI, vol. 8(2), pages 1-12, April.
    32. Sun, Yunpeng & Guan, Weimin & Razzaq, Asif & Shahzad, Mohsin & Binh An, Nguyen, 2022. "Transition towards ecological sustainability through fiscal decentralization, renewable energy and green investment in OECD countries," Renewable Energy, Elsevier, vol. 190(C), pages 385-395.
    33. Emmanuel Nkoa ONGO & Andrew Wujung VUKENKENG, 2014. "Does gross capital formation matter for economic growth in the CEMAC sub-region?," EuroEconomica, Danubius University of Galati, issue 2(33), pages 79-88, November.
    34. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, July.
    35. Atil, Ahmed & Nawaz, Kishwar & Lahiani, Amine & Roubaud, David, 2020. "Are natural resources a blessing or a curse for financial development in Pakistan? The importance of oil prices, economic growth and economic globalization," Resources Policy, Elsevier, vol. 67(C).
    36. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    37. Parisa Samimi & Hashem Salarzadeh Jenatabadi, 2014. "Globalization and Economic Growth: Empirical Evidence on the Role of Complementarities," PLOS ONE, Public Library of Science, vol. 9(4), pages 1-7, April.
    38. Miao, Yang & Razzaq, Asif & Adebayo, Tomiwa Sunday & Awosusi, Abraham Ayobamiji, 2022. "Do renewable energy consumption and financial globalisation contribute to ecological sustainability in newly industrialized countries?," Renewable Energy, Elsevier, vol. 187(C), pages 688-697.
    39. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-380, November.
    40. Razzaq, Asif & An, Hui & Delpachitra, Sarath, 2021. "Does technology gap increase FDI spillovers on productivity growth? Evidence from Chinese outward FDI in Belt and Road host countries," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    41. Sharma, Gagan Deep & Tiwari, Aviral Kumar & Jain, Mansi & Yadav, Anshita & Srivastava, Mrinalini, 2021. "COVID-19 and environmental concerns: A rapid review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 148(C).
    42. Kishwar Nawaz & Amine Lahiani & David Roubaud, 2019. "Natural resources as blessings and finance-growth nexus: A bootstrap ARDL approach in an emerging economy," Post-Print hal-03532512, HAL.
    43. Umer Shahzad & Magdalena Radulescu & Syed Rahim & Cem Isik & Zahid Yousaf & Stefan Alexandru Ionescu, 2021. "Do Environment-Related Policy Instruments and Technologies Facilitate Renewable Energy Generation? Exploring the Contextual Evidence from Developed Economies," Energies, MDPI, vol. 14(3), pages 1-25, January.
    44. Hoang Phong Le & Ho Hoang Gia Bao, 2020. "Renewable and Nonrenewable Energy Consumption, Government Expenditure, Institution Quality, Financial Development, Trade Openness, and Sustainable Development in Latin America and Caribbean Emerging M," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 242-248.
    45. Sharma, Gagan Deep & Tiwari, Aviral Kumar & Erkut, Burak & Mundi, Hardeep Singh, 2021. "Exploring the nexus between non-renewable and renewable energy consumptions and economic development: Evidence from panel estimations," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).
    46. Li, Yumei & Naqvi, Bushra & Caglar, Ersin & Chu, Chien-Chi, 2020. "N-11 countries: Are the new victims of resource-curse?," Resources Policy, Elsevier, vol. 67(C).
    47. Abbasi, Kashif & Jiao, Zhilun & Khan, Arman & Shahbaz, Muhammad, 2020. "Asymmetric impact of renewable and non-renewable energy on economic growth in Pakistan: New evidence from a nonlinear analysis," MPRA Paper 101854, University Library of Munich, Germany, revised 13 Jul 2020.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Savranlar, Buket & Atay Polat, Melike & Aslan, Alper, 2023. "What are the mistakes we think are correct about the ‘Natural resource curse’ hypothesis? New insights from quantile regressions via method of moments for EU," Resources Policy, Elsevier, vol. 85(PA).
    2. Eduardo Germán Zurita Moreano & María Gabriela González Bautista & Juan Pablo Vallejo Mata & Víctor Dante Ayaviri-Nina, 2024. "Is There a Link between Remittances, Capital Formation, Structural Transformation and Economic Growth? A Dynamic Panel Analysis for Latin America under the PVAR Approach," Economies, MDPI, vol. 12(5), pages 1-25, May.
    3. Chen, Fu & Xu, Jie & Zhang, Weiwei & Wei, Bowen & Li, Tingting, 2023. "Capital formation and natural resources extraction: A source of sustainable development or a curse for the economy?," Resources Policy, Elsevier, vol. 85(PB).
    4. Mumuni Sulemana & Njong Aloysius Mom, 2023. "Public sector spending, governance, and economic growth in Sub-Saharan Africa," Journal of Economics and Management, Sciendo, vol. 45(1), pages 147-181, January.
    5. Zheng, ShiYong & Liu, Hua & Hafeez, Muhammad & Wang, Xiaofeng & Fahad, Shah & Yue, Xiao-Guang, 2023. "Testing the resource curse hypothesis: The dynamic roles of institutional quality, inflation and growth for Dragon," Resources Policy, Elsevier, vol. 85(PA).
    6. Zhu, Ruikun & Xu, Qi & Xiqiang, Xia & Sibt-e-Ali, Muhammad & Waqas, Muhammad & Ullah, Irfan & Anwar, Ahsan, 2024. "Role of resources rent, research and development, and information and communication technologies on CO2 emissions in BRICS economies," Resources Policy, Elsevier, vol. 93(C).
    7. Huang, Huafang & Cheng, Xianfu & Wei, Liangli & Liu, Dongping & Deng, Minmin, 2024. "Are natural resources a driving force for financial development or a curse for the economy? Policy insight from Next-11 countries," Resources Policy, Elsevier, vol. 88(C).
    8. Junyan Zhang & Tufail Muhammad & Wensheng Dai & Qasim Raza Khan & Mushtaq Ahmad, 2024. "How Does the Resource Curse Influence Economic Performance? Exploring the Role of Natural Resource Rents and Renewable Energy Consumption in South Asia," Sustainability, MDPI, vol. 16(24), pages 1-22, December.
    9. Li, Chuhan & Gong, Kai, 2023. "Does the resource curse hypothesis hold in China? Evaluating the role of trade liberalisation and gross capital formation," Resources Policy, Elsevier, vol. 86(PA).
    10. Wolde-Rufael, Yemane & Mulat-Weldemeskel, Eyob, 2023. "Is natural capital a blessing or a curse for capital accumulation in low income countries?," Resources Policy, Elsevier, vol. 85(PA).
    11. Pratibha, S. & Sharma, Vishal & Krishna, M., 2024. "Nexus between total natural resource rents and public debt within symmetric and asymmetric framework: Fresh insight from resource-rich economy," Resources Policy, Elsevier, vol. 93(C).
    12. Tang, Yi, 2024. "Nexus of natural resource depletion, corruption and financial inclusion on bio-diversity loss: A systematic study on corrupt economies," Resources Policy, Elsevier, vol. 92(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Menghan & Zhang, Kaiyue & Alamri, Ahmad Mohammed & Ageli, Mohammed Moosa & Khan, Numan, 2023. "Resource curse hypothesis and sustainable development: Evaluating the role of renewable energy and R&D," Resources Policy, Elsevier, vol. 81(C).
    2. Ding, Yuanyi, 2023. "Does natural resources cause sustainable financial development or resources curse? Evidence from group of seven economies," Resources Policy, Elsevier, vol. 81(C).
    3. Liang, Jinhao & Razzaq, Asif & Sharif, Arshian & Irfan, Muhammad, 2022. "Revisiting economic and non-economic indicators of natural resources: Analysis of developed economies," Resources Policy, Elsevier, vol. 77(C).
    4. Deng, Wei & Akram, Rabia & Mirza, Nawazish, 2022. "Economic performance and natural resources: Evaluating the role of economic risk," Resources Policy, Elsevier, vol. 78(C).
    5. Liu, Qiang & Zhao, Zhongwei & Liu, Yiran & He, Yao, 2022. "Natural resources commodity prices volatility, economic performance and environment: Evaluating the role of oil rents," Resources Policy, Elsevier, vol. 76(C).
    6. Ma, Qiang & Mentel, Grzegorz & Zhao, Xin & Salahodjaev, Raufhon & Kuldasheva, Zebo, 2022. "Natural resources tax volatility and economic performance: Evaluating the role of digital economy," Resources Policy, Elsevier, vol. 75(C).
    7. Wu, Di & Yang, Yuping & Shi, Yi & Xu, Meng & Zou, Wenjie, 2022. "Renewable energy resources, natural resources volatility and economic performance: Evidence from BRICS," Resources Policy, Elsevier, vol. 76(C).
    8. Sun, Yanpeng & Chang, Hsuling & Vasbieva, Dinara G. & Andlib, Zubaria, 2022. "Economic performance, investment in energy resources, foreign trade, and natural resources volatility nexus: Evidence from China's provincial data," Resources Policy, Elsevier, vol. 78(C).
    9. Wang, Chen & Xia, Mengli & Wang, Piao & Xu, Junjie, 2022. "Renewable energy output, energy efficiency and cleaner energy: Evidence from non-parametric approach for emerging seven economies," Renewable Energy, Elsevier, vol. 198(C), pages 91-99.
    10. Zhou, Haonan & Li, Dongxin & Mustafa, Faisal & Altuntaş, Mehmet, 2022. "Natural resources volatility and South Asian economies: Evaluating the role of COVID-19," Resources Policy, Elsevier, vol. 75(C).
    11. Chang, Chiu-Lan & Fang, Ming, 2022. "Renewable energy-led growth hypothesis: New insights from BRICS and N-11 economies," Renewable Energy, Elsevier, vol. 188(C), pages 788-800.
    12. Gu, Xiao & Shen, Xi & Zhong, Xiangming & Wu, Tong & Rahim, Syed, 2023. "Natural resources and undesired productions of environmental outputs as green growth: EKC in the perspective of green finance and green growth in the G7 region," Resources Policy, Elsevier, vol. 82(C).
    13. Çetin, Murat & Sarıgül, Sevgi Sümerli & Işık, Cem & Avcı, Pınar & Ahmad, Munir & Alvarado, Rafael, 2023. "The impact of natural resources, economic growth, savings, and current account balance on financial sector development: Theory and empirical evidence," Resources Policy, Elsevier, vol. 81(C).
    14. Liu, Qiang & Sun, Hongyu & Luo, Haiming, 2022. "Resource-richness, technological innovation, and sustainable development: Evidence from emerging economies," Resources Policy, Elsevier, vol. 79(C).
    15. Wang, Zhongbao & Razzaq, Asif, 2022. "Natural resources, energy efficiency transition and sustainable development: Evidence from BRICS economies," Resources Policy, Elsevier, vol. 79(C).
    16. Fang, Shuya & Fang, Wei, 2023. "How fiscal decentralization and trade diversification influence sustainable development: Moderating role of resources dependency," Resources Policy, Elsevier, vol. 84(C).
    17. Gao, Chunjiao & Chen, Hongxi, 2023. "Electricity from renewable energy resources: Sustainable energy transition and emissions for developed economies," Utilities Policy, Elsevier, vol. 82(C).
    18. Wang, Xiang & Yin, Jian & Yang, Yao & Muda, Iskandar & Abduvaxitovna, Shamansurova Zilola & AlWadi, Belal Mahmoud & Castillo-Picon, Jorge & Abdul-Samad, Zulkiflee, 2023. "Relationship between the resource curse, Forest management and sustainable development and the importance of R&D Projects," Resources Policy, Elsevier, vol. 85(PA).
    19. Wang, Tianyang & Umar, Muhammad & Li, Menggang & Shan, Shan, 2023. "Green finance and clean taxes are the ways to curb carbon emissions: An OECD experience," Energy Economics, Elsevier, vol. 124(C).
    20. Liang, Huijun & Shi, Changkuan & Abid, Nabila & Yu, Yanliang, 2023. "Are digitalization and human development discarding the resource curse in emerging economies?," Resources Policy, Elsevier, vol. 85(PB).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jrpoli:v:78:y:2022:i:c:s0301420722002653. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30467 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.