Role of mineral-based industrialization in promoting economic growth: Implications for achieving environmental sustainability through financial management

Aimin Li and Shuyu Zhou

Resources Policy, 2024, vol. 92, issue C

Abstract: Industrialization based on mineral resources has historically been pivotal in driving many countries' economic development and growth. This study emphasizes the need to understand the intricate link between mineral-driven economic development and ecological responsibility. The present study utilized annual data from 1990 to 2022 and employed the Johanson approach to experimentally evaluate the impact of mineral-based industrialization on economic growth in the context of Canada. Johnson Cointegration analysis and the dynamic error corrections model confirmed long-run and short-run relationships among economic growth, and other independent variables (financial management, technological innovation, energy use, mineral rent, abundance of natural resources). In the long run abundance of natural resources shows a negative impact on economic growth by (−0.02) highlighting the validation of the environmental resource curse hypothesis. The coefficient of financial management indicates 1% increase in financial management will result in an improvement in economic growth of 0.11%. Mineral rent shows a positive and significant relationship with economic growth. Moreover, estimates of technological advancement show that a 1% increase in technological advancement will result in economic growth of 1.12%. The study further suggests that policymakers should diversify the economy by investing in the non-mineral sector and promoting innovation to reduce reliance on resource-dependent revenue. Lastly, funds must be allocated to educational and training initiatives to provide local laborers with the cutting-edge expertise required for mineral processing.

Keywords: Mineral-based industrialization; Economic growth; Financial management; Total natural resource rent; Mineral rent (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:92:y:2024:i:c:s0301420724003878

DOI: 10.1016/j.resourpol.2024.105020

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