Do natural resources play a role in economic development? Role of institutional quality, trade openness, and FDI

Jiacheng Wang, Jianchao Yang and Li Yang

Resources Policy, 2023, vol. 81, issue C

Abstract: The decline in environmental quality is influenced by natural resource use, which, in turn, affects economic growth. The Sustainable Development Goal (SDG) has helped bring environmental problems to the forefront of the international community's agenda. Therefore, the purpose of this study is to ascertain how natural resources (NRR), institutional quality (IQ), trade openness (TO), and foreign direct investment (FDI) have a substantial impact on economic development. The system GMM model uses NRR, IQ, TO, and FDI in 10 European nations (Australia, Belgium, the Netherlands, Italy, Greenland, the UK, Berlin, France, Russia, Portugal, and Switzerland) between 2008 and 2020 to ascertain the effects of economic recovery, natural resources, and sustainable and nonrenewable energy consumption. The European GMM model chose these nations because of their reasonably high gross domestic product (GDP). The long-term variations in all nations were calculated. The research concludes that these countries' economies improve after switching to renewable and nonrenewable energy sources. Depending on the country, natural resources may be a boon or bane for economic development. Carbon dioxide emissions rise with the economy and from nonrenewable sources of energy but fall when renewable power is used instead. Each panel also considers the quantity of carbon dioxide (CO2) emitted by burning natural resources. Policies that promote sustainable power to lower carbon dioxide emissions and improve learning environments to encourage economic development can be used in such areas.

Keywords: Natural resource; Economic development; Sustainable development goal; GMM model; Trade openness (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:81:y:2023:i:c:s0301420723000028

DOI: 10.1016/j.resourpol.2023.103294

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