IDEAS home Printed from https://ideas.repec.org/a/eee/jrpoli/v63y2019ic35.html
   My bibliography  Save this article

Financial management of natural resource market: Long-run and inter-temporal (forecast) relationship

Author

Listed:
  • Rashid Khan, Haroon Ur
  • Zaman, Khalid
  • Usman, Bushra
  • Nassani, Abdelmohsen A.
  • Aldakhil, Abdullah Mohammed
  • Qazi Abro, Muhammad Moinuddin

Abstract

The financial management of natural resource market is imperative to achieve global environmental sustainability agenda through financing green projects. The objective of the study is to examine the role of financial development and growth specific factors on natural resource market in a context of Pakistan by using a time series data from 1970 to 2018. The results show that in the short-run, there is a negative relationship between broad money supply and total natural resource rents (including coal rents, mineral rents, and oil rents) while carbon tax negatively impact total natural resource rents through low mineral rents, thus the viability of ‘resource curse’ hypothesis is confirmed under financial constraint environment in a country. The ‘resource enhancing’ growth activities are largely visible with country's per capita income, FDI inflows, and trade openness that increases forest rents, mineral rents and oil rents respectively. In the long-run, broad money supply and carbon tax negatively impact a large number of prescribed natural resource rents with mediation of population density, while FDI inflows and trade in service supported few resource rents that entrenching growth activities in a given time period. The results further discussed the forecast relationship between financial factors and natural resource markets, which gives sound inferences to develop green financing resource management policies in a country.

Suggested Citation

  • Rashid Khan, Haroon Ur & Zaman, Khalid & Usman, Bushra & Nassani, Abdelmohsen A. & Aldakhil, Abdullah Mohammed & Qazi Abro, Muhammad Moinuddin, 2019. "Financial management of natural resource market: Long-run and inter-temporal (forecast) relationship," Resources Policy, Elsevier, vol. 63(C), pages 1-1.
    • Handle: RePEc:eee:jrpoli:v:63:y:2019:i:c:35
    DOI: 10.1016/j.resourpol.2019.101452
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301420719303216
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.resourpol.2019.101452?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fleming, David A. & Measham, Thomas G. & Paredes, Dusan, 2015. "Understanding the resource curse (or blessing) across national and regional scales: Theory, empirical challenges and an application," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(4), October.
    2. Jalil, Abdul & Feridun, Mete, 2011. "The impact of growth, energy and financial development on the environment in China: A cointegration analysis," Energy Economics, Elsevier, vol. 33(2), pages 284-291, March.
    3. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Institutions and the Resource Curse," Economic Journal, Royal Economic Society, vol. 116(508), pages 1-20, January.
    4. Murshed, Syed Mansoob & Serino, Leandro Antonio, 2011. "The pattern of specialization and economic growth: The resource curse hypothesis revisited," Structural Change and Economic Dynamics, Elsevier, vol. 22(2), pages 151-161, June.
    5. Daniel Lederman & William F. Maloney, 2007. "Natural Resources : Neither Curse nor Destiny," World Bank Publications - Books, The World Bank Group, number 7183, December.
    6. Havranek, Tomas & Horvath, Roman & Zeynalov, Ayaz, 2016. "Natural Resources and Economic Growth: A Meta-Analysis," World Development, Elsevier, vol. 88(C), pages 134-151.
    7. Jarrett, Uchechukwu & Mohaddes, Kamiar & Mohtadi, Hamid, 2019. "Oil price volatility, financial institutions and economic growth," Energy Policy, Elsevier, vol. 126(C), pages 131-144.
    8. Usama Al-Mulali & Ilhan Ozturk & Hooi Lean, 2015. "The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 79(1), pages 621-644, October.
    9. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    10. Shahbaz, Muhammad & Destek, Mehmet Akif & Okumus, Ilyas & Sinha, Avik, 2019. "An empirical note on comparison between resource abundance and resource dependence in resource abundant countries," Resources Policy, Elsevier, vol. 60(C), pages 47-55.
    11. Balsalobre-Lorente, Daniel & Shahbaz, Muhammad & Roubaud, David & Farhani, Sahbi, 2018. "How economic growth, renewable electricity and natural resources contribute to CO2 emissions?," Energy Policy, Elsevier, vol. 113(C), pages 356-367.
    12. Moradbeigi, Maryam & Law, Siong Hook, 2017. "The role of financial development in the oil-growth nexus," Resources Policy, Elsevier, vol. 53(C), pages 164-172.
    13. Adams, Dawda & Adams, Kweku & Ullah, Subhan & Ullah, Farid, 2019. "Globalisation, governance, accountability and the natural resource ‘curse’: Implications for socio-economic growth of oil-rich developing countries," Resources Policy, Elsevier, vol. 61(C), pages 128-140.
    14. Anne D. Boschini & Jan Pettersson & Jesper Roine, 2007. "Resource Curse or Not: A Question of Appropriability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(3), pages 593-617, September.
    15. Julie Anne Cronin & Don Fullerton & Steven Sexton, 2019. "Vertical and Horizontal Redistributions from a Carbon Tax and Rebate," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(S1), pages 169-208.
    16. Satti, Saqlain Latif & Farooq, Abdul & Loganathan, Nanthakumar & Shahbaz, Muhammad, 2014. "Empirical evidence on the resource curse hypothesis in oil abundant economy," Economic Modelling, Elsevier, vol. 42(C), pages 421-429.
    17. Shahbaz, Muhammad & Naeem, Muhammad & Ahad, Muhammad & Tahir, Iqbal, 2018. "Is natural resource abundance a stimulus for financial development in the USA?," Resources Policy, Elsevier, vol. 55(C), pages 223-232.
    18. Tiba, Sofien & Frikha, Mohamed, 2019. "The controversy of the resource curse and the environment in the SDGs background: The African context," Resources Policy, Elsevier, vol. 62(C), pages 437-452.
    19. Boutabba, Mohamed Amine, 2014. "The impact of financial development, income, energy and trade on carbon emissions: Evidence from the Indian economy," Economic Modelling, Elsevier, vol. 40(C), pages 33-41.
    20. Mutiu A. Oyinlola & Abdulfatai A. Adedeji & Modupe O. Bolarinwa, 2020. "Exploring the nexus among natural resource rents, human capital and industrial development in the SSA region," Economic Change and Restructuring, Springer, vol. 53(1), pages 87-111, February.
    21. Dong-Hyeon Kim & Shu-Chin Lin, 2018. "The Resource Curse Hypothesis: Dynamic Heterogeneous Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(12), pages 2698-2717, September.
    22. Yuri Quixina & Álvaro Almeida, 2014. "Financial Development and Economic Growth in a Natural Resource Based Economy: Evidence from Angola," FEP Working Papers 542, Universidade do Porto, Faculdade de Economia do Porto.
    23. Beck, T.H.L., 2011. "Finance and Oil. Is there a Resource Curse in Financial Development?," Other publications TiSEM 123f034a-fde0-4c02-b147-c, Tilburg University, School of Economics and Management.
    24. Yuxiang, Karl & Chen, Zhongchang, 2011. "Resource abundance and financial development: Evidence from China," Resources Policy, Elsevier, vol. 36(1), pages 72-79, March.
    25. Mohamed Amine Boutabba, 2014. "The impact of financial development, income, energy and trade on carbon emissions: Evidence from the Indian economy," Post-Print hal-02877966, HAL.
    26. Victor Polterovich, Vladimir Popov, Alexander Tonis, 2010. "Resource abundance: A curse or blessing?," Working Papers 93, United Nations, Department of Economics and Social Affairs.
    27. Tamazian, Artur & Chousa, Juan Piñeiro & Vadlamannati, Krishna Chaitanya, 2009. "Does higher economic and financial development lead to environmental degradation: Evidence from BRIC countries," Energy Policy, Elsevier, vol. 37(1), pages 246-253, January.
    28. Dustin Chambers & Jonathan Munemo, 2019. "Natural Resource Dependency and Entrepreneurship: Are Nations with High Resource Rents Cursed?," Journal of International Development, John Wiley & Sons, Ltd., vol. 31(2), pages 137-164, March.
    29. Salahuddin, Mohammad & Alam, Khorshed & Ozturk, Ilhan & Sohag, Kazi, 2018. "The effects of electricity consumption, economic growth, financial development and foreign direct investment on CO2 emissions in Kuwait," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2002-2010.
    30. Hattendorff, Christian, 2014. "Natural resources, export concentration and financial development," Discussion Papers 2014/34, Free University Berlin, School of Business & Economics.
    31. Raza, Syed Ali & Shah, Nida & Shahbaz, Muhammad, 2018. "Does economic policy uncertainty influence gold prices? Evidence from a nonparametric causality-in-quantiles approach," Resources Policy, Elsevier, vol. 57(C), pages 61-68.
    32. World Bank, 2011. "World Development Indicators 2011," World Bank Publications - Books, The World Bank Group, number 2315, December.
    33. Papyrakis, Elissaios & Gerlagh, Reyer, 2004. "The resource curse hypothesis and its transmission channels," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 181-193, March.
    34. Papyrakis, Elissaios & Gerlagh, Reyer, 2007. "Resource abundance and economic growth in the United States," European Economic Review, Elsevier, vol. 51(4), pages 1011-1039, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yang, Xiao & Anser, Muhammad Khalid & Yusop, Zulkornain & Abbas, Shujaat & Khan, Muhammad Azhar & Zaman, Khalid, 2022. "Volatility in mineral resource pricing causes ecological footprints: A cloud on the horizon," Resources Policy, Elsevier, vol. 77(C).
    2. Nassani, Abdelmohsen A. & Awan, Usama & Zaman, Khalid & Hyder, Shabir & Aldakhil, Abdullah Mohammed & Abro, Muhammad Moinuddin Qazi, 2019. "Management of natural resources and material pricing: Global evidence," Resources Policy, Elsevier, vol. 64(C).
    3. Aldakhil, Abdullah Mohammed & Nassani, Abdelmohsen A. & Zaman, Khalid, 2020. "The role of technical cooperation grants in mineral resource extraction: Evidence from a panel of 12 abundant resource economies," Resources Policy, Elsevier, vol. 69(C).
    4. Lee, Chien-Chiang & Lou, Runchi & Wang, Fuhao, 2023. "Geopolitical risk and the sustainable utilization of natural resources: Evidence from developing countries," Resources Policy, Elsevier, vol. 85(PA).
    5. Ali, Adnan & Ramakrishnan, Suresh & Faisal,, 2022. "Financial development and natural resources. Is there a stock market resource curse?," Resources Policy, Elsevier, vol. 75(C).
    6. Dogan, Eyup & Altinoz, Buket & Tzeremes, Panayiotis, 2020. "The analysis of ‘Financial Resource Curse’ hypothesis for developed countries: Evidence from asymmetric effects with quantile regression," Resources Policy, Elsevier, vol. 68(C).
    7. Xie, Bofeng & Rehman, Mubeen Abdur & Zhang, Junyan & Yang, Runze, 2022. "Does the financialization of natural resources lead toward sustainability? An application of advance panel Granger non-causality," Resources Policy, Elsevier, vol. 79(C).
    8. Nassani, Abdelmohsen A. & Aldakhil, Abdullah Mohammed & Zaman, Khalid, 2021. "Ecological footprints jeopardy for mineral resource extraction: Efficient use of energy, financial development and insurance services to conserve natural resources," Resources Policy, Elsevier, vol. 74(C).
    9. Asif, Muhammad & Khan, Khan Burhan & Anser, Muhammad Khalid & Nassani, Abdelmohsen A. & Abro, Muhammad Moinuddin Qazi & Zaman, Khalid, 2020. "Dynamic interaction between financial development and natural resources: Evaluating the ‘Resource curse’ hypothesis," Resources Policy, Elsevier, vol. 65(C).
    10. Adnan Ali & Suresh Ramakrishnan & Faisal Faisal & Tooba Akram & Sidra Salam & Sami Ur Rahman, 2023. "Bibliometric analysis of finance and natural resources: past trend, current development, and future prospects," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(11), pages 13035-13064, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ben-Salha, Ousama & Dachraoui, Hajer & Sebri, Maamar, 2021. "Natural resource rents and economic growth in the top resource-abundant countries: A PMG estimation," Resources Policy, Elsevier, vol. 74(C).
    2. Ozcan, Burcu & Temiz, Mehmet & Gültekin Tarla, Esma, 2023. "The resource curse phenomenon in the case of precious metals: A panel evidence from top 19 exporting countries," Resources Policy, Elsevier, vol. 81(C).
    3. Shahbaz, Muhammad & Naeem, Muhammad & Ahad, Muhammad & Tahir, Iqbal, 2018. "Is natural resource abundance a stimulus for financial development in the USA?," Resources Policy, Elsevier, vol. 55(C), pages 223-232.
    4. Asif, Muhammad & Khan, Khan Burhan & Anser, Muhammad Khalid & Nassani, Abdelmohsen A. & Abro, Muhammad Moinuddin Qazi & Zaman, Khalid, 2020. "Dynamic interaction between financial development and natural resources: Evaluating the ‘Resource curse’ hypothesis," Resources Policy, Elsevier, vol. 65(C).
    5. Dogan, Eyup & Altinoz, Buket & Tzeremes, Panayiotis, 2020. "The analysis of ‘Financial Resource Curse’ hypothesis for developed countries: Evidence from asymmetric effects with quantile regression," Resources Policy, Elsevier, vol. 68(C).
    6. Jiang, Chun & Zhang, Yadi & Kamran, Hafiz Waqas & Afshan, Sahar, 2021. "Understanding the dynamics of the resource curse and financial development in China? A novel evidence based on QARDL model," Resources Policy, Elsevier, vol. 72(C).
    7. Ali, Adnan & Ramakrishnan, Suresh & Faisal,, 2022. "Financial development and natural resources. Is there a stock market resource curse?," Resources Policy, Elsevier, vol. 75(C).
    8. Ruba A. Aljarallah & Andrew Angus, 2020. "Dilemma of Natural Resource Abundance: A Case Study of Kuwait," SAGE Open, , vol. 10(1), pages 21582440198, January.
    9. Dauvin, Magali & Guerreiro, David, 2017. "The Paradox of Plenty: A Meta-Analysis," World Development, Elsevier, vol. 94(C), pages 212-231.
    10. Badeeb, Ramez Abubakr & Szulczyk, Kenneth R. & Zahra, Samia & Mukherjee, Tanusree Chakravarty, 2023. "Innovation dynamics in the natural resource curse hypothesis: A new perspective from BRICS countries," Resources Policy, Elsevier, vol. 81(C).
    11. Sun, Yanpeng & Ak, Aysegul & Serener, Berna & Xiong, Deping, 2020. "Natural resource abundance and financial development: A case study of emerging seven (E−7) economies," Resources Policy, Elsevier, vol. 67(C).
    12. Guan, Jialin & Kirikkaleli, Dervis & Bibi, Ayesha & Zhang, Weike, 2020. "Natural resources rents nexus with financial development in the presence of globalization: Is the “resource curse” exist or myth?," Resources Policy, Elsevier, vol. 66(C).
    13. Wang, Zhe & Teng, Yin-Pei & Wu, Shuzhao & Liu, Yuxiang & Liu, Xianchang, 2023. "Geopolitical risk, financial system and natural resources extraction: Evidence from China," Resources Policy, Elsevier, vol. 82(C).
    14. Shahbaz, Muhammad & Nasir, Muhammad Ali & Roubaud, David, 2018. "Environmental degradation in France: The effects of FDI, financial development, and energy innovations," Energy Economics, Elsevier, vol. 74(C), pages 843-857.
    15. Gokmenoglu, Korhan K. & Rustamov, Bezhan, 2022. "The role of the natural resource abundance in the short and long run: The case of the Kingdom of Saudi Arabia," Resources Policy, Elsevier, vol. 77(C).
    16. Badeeb, Ramez Abubakr & Lean, Hooi Hooi & Clark, Jeremy, 2017. "The evolution of the natural resource curse thesis: A critical literature survey," Resources Policy, Elsevier, vol. 51(C), pages 123-134.
    17. Yilanci, Veli & Aslan, Murat & Ozgur, Onder, 2021. "Disaggregated analysis of the curse of natural resources in most natural resource-abundant countries," Resources Policy, Elsevier, vol. 71(C).
    18. Muhammad Atif Khan & Muhammad Asif Khan & Kishwar Ali & József Popp & Judit Oláh, 2020. "Natural Resource Rent and Finance: The Moderation Role of Institutions," Sustainability, MDPI, vol. 12(9), pages 1-23, May.
    19. Sweidan, Osama D. & Elbargathi, Khadiga, 2022. "The effect of oil rent on economic development in Saudi Arabia: Comparing the role of globalization and the international geopolitical risk," Resources Policy, Elsevier, vol. 75(C).
    20. Wang, Zhipeng & Zhang, Mei & Ageli, Mohammed Moosa, 2022. "Revisiting resource curse hypothesis and sustainable development: Evaluating the role of financial risk for USA," Resources Policy, Elsevier, vol. 79(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jrpoli:v:63:y:2019:i:c:35. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30467 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.