Financial development, violence, and resource curse: How mineral resources are contributing towards growth of resource-rich countries

Han Yan

Resources Policy, 2024, vol. 89, issue C

Abstract: Resource curse or blessing is widely debated in academic literature with little consensus. This study examines the impact of mineral resource rents (MRR), financial development (FD), and conflicts and Violence (Violence) on the economic growth of the top 15 resource-rich countries of the world. We have employed the cross-sectional autoregressive distributive lagged (CS-ARDL) model and D-H causality tests to determine the empirical relation between the hypothesized variables from 1995 to 2022. The study supports the resource curse hypothesis for low-income countries and the resource blessing hypothesis for middle-to high-income countries. FD has a robust positive impact on the economic growth of all countries irrespective of their income levels and supports the resource's positive impact coupled with rents in the studied sample. On the other side, Violence is prevalent in low-income countries, reducing not only the economic growth but also increasing the volume of resource curse. Therefore, effective resource management that does not trigger civil unrest or Violence in the country is suggested to realize the potential beneficial impact of resources. FD may be a viable solution to effectively manage resources and reduce the risk of conflicts in low-income countries.

Keywords: Mineral resources; Financial development; Resource curse; Conflicts; Violence (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:89:y:2024:i:c:s0301420723012576

DOI: 10.1016/j.resourpol.2023.104546

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