Impact of capital investment and industrial structure optimization from the perspective of "resource curse": Evidence from developing countries

Shuhong Wang, Wenqian Tian and Binbin Lu

Resources Policy, 2023, vol. 80, issue C

Abstract: In the background of the worldwide pursuit of sustainable economic development, some developing countries with abundant resources are still facing problems of industrial transformation and upgrading and improving their development models, although they continue to increase capital investment to provide the resources and talent for industrial structure optimization. These problems occur due to the mismatch between natural resources acquired and capital invested. Therefore, this study examines 18 developing countries that are rich in natural resources but face difficulties in industrial structure transformation and investigates the influence of natural resource endowment on the relationship between capital investments and industrial structure optimization based on panel data from 1995 to 2019. The results indicate that physical capital investment in developing countries with abundant natural resources inhibits industrial transformation, while human capital and labor promote it. The presence of the threshold of natural resource abundance makes the effect of different capital investments on the optimization of industrial structure non-linear. Specifically, the increase in natural resource investment enhances the inhibiting effect of physical capital on industrial structure optimization and weakens the promoting effect of human capital. Therefore, this study argues that reasonable control of the ratio of natural resource investment to capital, promotion of physical asset restructuring or business consolidation, and improvement of human capital quality are critical for achieving industrial structural optimization in developing countries.

Keywords: Industrial structure optimization; Capital investment; Abundant resources; Resource curse (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:80:y:2023:i:c:s030142072200719x

DOI: 10.1016/j.resourpol.2022.103276

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