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Resources extraction and access to clean energy a curse or blessing for the economy? Middle-income economies case study

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  • Wan, Muchun
  • Mughal, Nafeesa
  • Peng, Tao
  • Yepez Peña, Miguel Angel

Abstract

The study evaluates the long-lasting and debatable issue of the resource-growth nexus, which unearths whether natural resources have a curse or blessing on economic growth. Hence, this research revisits the nexus of natural resources and economic growth in middle-income economies with more relevant and effective variables: energy efficiency and access to clean fuel technology from 1988 to 2021. The study leveraged various time series methods, including the ADF-GLS stationary analysis to govern the stationary sequence and the Bayer-Hanck cointegration test for long-term cointegration. The primary methods include FMOLS, DOLS, and CCR, which reveal long-term elasticities between dependent and independent variables. Both non-parametric quantile and parametric robust regression are used for robustness checks. The results reveal that time series were found static D (1) and long-term cointegration occurs between economic growth and its regressors: mineral rents, natural gas rents, energy efficiency, and access to clean fuel technology. The empirical findings exhibit that natural gas and mineral rents show an encouraging influence on the economy's growth in middle-income economies, confirming the blessings of these resources. Moreover, energy efficiency and access to clean fuel technology allow effective use of natural resource rents and endorse supportable economic growth. The robustness check scrutiny confirms the results via robust regression, while the robustness test of quantile regression displays asymmetries in the mineral rents and natural gas rents across quantiles. These results indicate several policy implications to policymakers regarding the use of energy efficiency and access to clean fuel technologies should be increased and encouraged to allow the effective use of natural resources for sustainable expansion of the economy.

Suggested Citation

  • Wan, Muchun & Mughal, Nafeesa & Peng, Tao & Yepez Peña, Miguel Angel, 2024. "Resources extraction and access to clean energy a curse or blessing for the economy? Middle-income economies case study," Resources Policy, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:jrpoli:v:88:y:2024:i:c:s0301420723011303
    DOI: 10.1016/j.resourpol.2023.104419
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