Natural resources a curse or blessing: The story of Latin American and Caribbean economies employing bootstrap quantile method

Yanling Xu, Tian Xu, Xiying Huang and Chien-Chi Chu

Resources Policy, 2024, vol. 90, issue C

Abstract: Despite the abundance of research on the correlation between natural resources and economic growth, studies specifically focusing on Latin American and Caribbean (LAC) economies remain scant. This study fills this gap by investigating the impact of natural resources, such as oil rents, natural gas rents, and mineral rents, on the economic growth of LAC economies from 1984 to 2022. We additionally consider industrial value added and trade as key determinants. We employ an array of time-series methodologies, including DF-GLS for unit root specification, Bayer-Hanck for establishing long-run equilibrium, and bootstrap quantile regression as the main method. To enhance the robustness of our findings, we supplement this with non-parametric (quantile regression) and parametric methods (FMOLS, DOLS, CCR, and least squares with structural breaks). Our results suggest a mixed impact of natural resource rents on LAC's economic growth, highlighting an asymmetric relationship. Oil rents show a negative “resource curse” effect, while natural gas rents contribute positively. Mineral rents display a positive, though insignificant, impact in lower quantiles but have a significant positive effect in upper quantiles. Additionally, industrial value-added and trade stimulate GDP across quantiles. These findings withstand both parametric and non-parametric robustness checks. The study advises enhancing natural resource utilization, fostering industrial growth, and facilitating trade for the economic advancement of the LAC economies.

Keywords: Natural resources; GDP; Industrial value added; Trade; Bootstrap quantile regression; Latin American and Caribbean economies (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:90:y:2024:i:c:s0301420724001259

DOI: 10.1016/j.resourpol.2024.104758

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