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Resource dependency and green growth paradigm: Exploring interstice mechanism using financial resource availability and FDI in EAP region

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  • Zuo, Liang
  • Luo, Shunjun

Abstract

Natural resources can boost economic growth, support sustainability, and protect the environment. Revenues from resource exploitation can fund social programs, education, and healthcare. Intelligent management of financial resources can help balance resource use and sustainable growth, aiding in environmental preservation. In the same pursuits, this research investigates the role of domestic and international investment availability in mediating the relationship between natural resources and green growth. We analyzed the Central Asian and Pacific (EAP) regions from 1995 to 2022. This study employs a structural equation model to quantify natural resources' direct, indirect, and overall influence on green growth. It supports the resource curse hypothesis in the region. However, the mitigation of the resource curse in the region is observed through higher foreign direct investment (FDI), while the domestic financial resources exacerbate this phenomenon. FDI can mitigate the adverse consequences of Green Growth (GG) by generating employment opportunities and other sources of income. At the same time, insufficient controls and oversight in the administration of domestic financial resources contribute to the heightened influence of natural resources on GG. These factors result in the mishandling of funds, restricted investment in other sectors, and fluctuations in commodity prices.

Suggested Citation

  • Zuo, Liang & Luo, Shunjun, 2024. "Resource dependency and green growth paradigm: Exploring interstice mechanism using financial resource availability and FDI in EAP region," Resources Policy, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:jrpoli:v:92:y:2024:i:c:s0301420724003088
    DOI: 10.1016/j.resourpol.2024.104941
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