Natural resources volatility and geopolitical risk: A novel perspective of oil and mineral rents using quantile-quantile regression for China

Lingyan Meng and Jinshi Li

Resources Policy, 2024, vol. 88, issue C

Abstract: Extant literature intends to identify the factors influencing geopolitical risk in various developed and emerging regions. However, it lacks the true connection between natural resource volatility and geopolitical risk in the context of mineral and oil rents. This study analyzes the extended period of 1985–2022 for China via time series approaches. The estimated results of the Engle-Granger single equation cointegration verified the presence of the long-run equilibrium relationship between the variables. Under the data's non-normality, this study uses the Quantile-on-Quantile regression approach. The estimated results asserted that natural resource volatility asymmetrically influences geopolitical risk in the country. Where the influence of mineral rents and oil rents are found negative with the highest magnitude in the lower quantiles, while positive with the highest magnitude in the upper quantiles. The pairwise Granger causality test validates the bidirectional causal connection between the variables. This study suggests adopting alternate (renewable) energy sources, investment in natural resource extraction, and reducing imports of minerals and oil to reduce geopolitical risk in the country.

Keywords: Natural resources volatility; Geopolitical risk; Mineral rents; Oil rents; China; Quantile-on-Quantile (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:88:y:2024:i:c:s0301420723012102

DOI: 10.1016/j.resourpol.2023.104499

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