Does natural resources cause sustainable financial development or resources curse? Evidence from group of seven economies
Resources Policy, 2023, vol. 81, issue C
The current study tends to answer the question of whether natural resources are a curse or a blessing for financial development in the group of seven (G7) economies. This study also analyzed the role of technological innovation, exports, and renewable energy in financial development from 1990 to 2020. The study's empirical results validate the long-run equilibrium relationship between the variables. Due to asymmetric data distribution, this study uses the novel method of moment quantile regression. The empirical outcomes are evident that natural resources adversely affect financial development, thus validating the natural resource curse. Also, renewable energy consumption negatively affects financial development. In contrast, technological innovation and exports substantially enhance financial development throughout the quantiles. The results are robust and reliable as validated by the panel Fully Modified Ordinary Least Square approach. Besides, the pairwise Granger causality asserted that there is bidirectional causal nexus between financial development and the priory discussed variables. This study suggests that authoritative interferes with the sustainable extraction of natural resources and regulating or channelizing them with the utilization of financial resources. Also, this study recommends policies to enhance support and encourage technological innovation to promote financial development in the G7 economies.
Keywords: Natural resource rents; Resource curse; Financial development; Technological innovation; Renewable energy; Exports; Method of moment quantile regression (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:81:y:2023:i:c:s0301420723000211
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