Inverted N-shape relationships: revisiting the dynamic effect of natural resources on poverty in Indonesia

Annisaa Rizky Dwi Brintanti (), Iqram Ramadhan Jamil (), Usman Alhassan (), Brama Yudha Kusmara () and Yessi Rahmawati ()
Additional contact information
Annisaa Rizky Dwi Brintanti: Universitsas Airlangga, Surabaya
Iqram Ramadhan Jamil: Research Institute of Socio-Economic Development (RISED)
Usman Alhassan: Ritsumeikan University
Brama Yudha Kusmara: Kementerian Keuangan
Yessi Rahmawati: Universitsas Airlangga, Surabaya

Asia-Pacific Journal of Regional Science, 2025, vol. 9, issue 1, No 4, 83-105

Abstract: Abstract Indonesia is recognized as one of the countries with abundant natural resources, especially in the mining sector. However, revenue from these natural resources have not significantly improved the population’s well-being or reduced poverty rate. Notably, some regions with high natural resource revenue still experience high poverty level. Therefore, this study delved into the intricate relationships between natural resource abundance and poverty dynamics in Indonesia. Utilizing panel data spanning from 2015 to 2022 across 444 regencies/cities, we employed advanced econometric techniques, Method of Moment Quantile Regression (MMQR), to unravel the nuanced effects of natural resource revenue on poverty rates. Moreover, our study challenged conventional linear analyses of the natural resource curse hypothesis, emphasizing the need for non-linear modeling approaches to capture the intricate dynamics at play. Our findings reveal a non-linear relationship between natural resource revenue and poverty, characterized by an inverted-N-shape, with significant impacts observed in lower and medium quantile groups. Surprisingly, the linkage between natural resource revenue–poverty does not appear in the high quantile group, suggesting that natural resource revenue is insufficient to benefit the region with severe/extreme poverty rate. Our research underscores the importance of considering cross-sectional dependence and employing robust estimation methods like MMQR to address complex interactions within panel datasets. These findings contribute to the ongoing discourse on natural resource management and poverty alleviation strategies, providing valuable insights for policymakers and researchers alike.

Keywords: Natural resource curse; Economic development; Indonesia; Sustainable development (search for similar items in EconPapers)
JEL-codes: O13 Q32 (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s41685-024-00368-0 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:apjors:v:9:y:2025:i:1:d:10.1007_s41685-024-00368-0

Ordering information: This journal article can be ordered from
https://www.springer ... cience/journal/41685

DOI: 10.1007/s41685-024-00368-0

Access Statistics for this article

Asia-Pacific Journal of Regional Science is currently edited by Yoshiro Higano

More articles in Asia-Pacific Journal of Regional Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().