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Are natural resources a driving force for financial development or a curse for the economy? Policy insight from Next-11 countries

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  • Huang, Huafang
  • Cheng, Xianfu
  • Wei, Liangli
  • Liu, Dongping
  • Deng, Minmin

Abstract

This research examines the N-11 economies from 1990 to 2020 from the standpoint of the connection between natural resources and financial development, considering such control variables as energy consumption and FDI. This study further used Panel data, as well as the most appropriate method, such as Panel Quantile Regression (PQR) for a long-run connection, to examine the status of N-11 economies and track the dynamic interaction of several significant elements through time. Here are some of the most important model results: Panel cointegration tests show that the variables in question are indeed related in the long run. Interestingly natural resources like Oil rents reduce financial development while natural gas rents enhance financial development. The control variables such as foreign direct investment (FDI) and energy use (ENR) increase financial development in the targeted economies. Strong policy implications stem from our empirical findings, which stress the importance of encouraging both energy use and foreign direct investment (FDI) for the efficient utilization and supervision of natural resources in the service of financial development.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:jrpoli:v:88:y:2024:i:c:s0301420723011777
    DOI: 10.1016/j.resourpol.2023.104466
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