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Does the rent of natural resources gear up or slow down the economy? An ARDL bound testing approach in Bangladesh

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  • Md. Mominul Islam

    (Mawlana Bhashani Science and Technology University)

  • Al Amin Abbasi

    (Mawlana Bhashani Science and Technology University)

  • Subroto Dey

    (Mawlana Bhashani Science and Technology University)

Abstract

One of the major sources of financing for development projects of a government in achieving macroeconomic objectives is collecting revenues from taxes and non-tax sources. Rent form resources have an exigent role for the evaluation of economic welfare. Thus, in both the developed and developing economies, natural resources occupy a crucial importance. The novelty of this study counts on the approach to explore the economic growth impacts of natural resources via the transmission channel of its utilization in Bangladesh. The study aims to pursue the influence of resource rent for the period 1990 to 2017. To approach cointegration, autoregressive distributed lag is used. A significant positive influence of rent from resources to growth is found for Bangladesh. This implies proper use of the funds generated through resource rent. Exports, being a vital factor of trade as well as the economy as a whole, should be taken care of which shows negative signs in our study. In the short run, the population growth rate is affecting our economy whereas the effect is reversed in the long run. Domestic credit provided by the financial sector affects negatively and imports as well as gross capital formation have positive signs which is good in the sense that it promotes our country to sustainable development.

Suggested Citation

  • Md. Mominul Islam & Al Amin Abbasi & Subroto Dey, 2023. "Does the rent of natural resources gear up or slow down the economy? An ARDL bound testing approach in Bangladesh," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(1), pages 29-44, January.
    • Handle: RePEc:spr:minecn:v:36:y:2023:i:1:d:10.1007_s13563-022-00300-y
    DOI: 10.1007/s13563-022-00300-y
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