Nonlinear relationship between natural resources and economic growth: The role of frontier technology

Tao Xie, Ye Xu and Yu Li

Resources Policy, 2024, vol. 90, issue C

Abstract: Natural resources have long been considered a possible engine for economic growth in underdeveloped nations. The nonlinear relationship between natural resources and economic growth is examined, focusing on the regulating function of frontier technology in developing nations. The resource-growth link is estimated using a panel dataset of 57 developing countries from 2008 to 2019 using the System Generalized Method of Moments (GMM) model. Our results show an inverse-U-shaped relationship, where initial resource availability positively influences economic growth, but increased reliance on natural resources after a certain threshold hinders economic growth. It emphasizes the need for efficient resource management and diversifying one’s income sources to counteract the negative consequences of the resource curse. This study also reveals the critical part frontier technology had in determining the resource-growth link. The favorable effects of natural resources on economic growth are strengthened by frontier technology, which includes cutting-edge developments in information and communication technology, artificial intelligence, renewable energy, and sophisticated manufacturing. The research’s policy repercussions highlight the value of strategic investments in emerging technologies, human capital growth, and institutional reforms. Overall, this study offers an essential new understanding of the difficulties of resource-driven economic development in developing nations. Our findings provide evidence-based recommendations for decision-makers to support human development, sustainable economic growth, and poverty reduction.

Keywords: Economic growth; Resource curse hypothesis; Frontier technology; Generalized method of moments (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:90:y:2024:i:c:s0301420724001983

DOI: 10.1016/j.resourpol.2024.104831

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