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What are the mistakes we think are correct about the ‘Natural resource curse’ hypothesis? New insights from quantile regressions via method of moments for EU

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  • Savranlar, Buket
  • Atay Polat, Melike
  • Aslan, Alper

Abstract

The nexus among natural resources and economic growth has recently been extensively studied in the context of the “Natural Resource Curse (NRC)” hypothesis. It is critical to use the latest analysis techniques in the development of the relevant literature. Therefore, this study aims to test the NRC hypothesis in EU member countries applying the Method of Moments Quantile Regression. Moreover, the focus of this study on EU countries for the first time fills an important gap in the literature. Renewable energy consumption, gross fixed capital formation, and urbanization are adopted as control variables. The findings demonstrate the validity of the NRC hypothesis at all quantile levels. Renewable energy consumption contributes to economic growth up to 0.70 quantile level. Additionally, gross fixed capital formation and urbanization have a positive impact on growth at all quantile levels. Empirical outputs highlight the importance of natural resources for growth in EU member countries and raise suggestions for possible policy formulation and implementation processes.

Suggested Citation

  • Savranlar, Buket & Atay Polat, Melike & Aslan, Alper, 2023. "What are the mistakes we think are correct about the ‘Natural resource curse’ hypothesis? New insights from quantile regressions via method of moments for EU," Resources Policy, Elsevier, vol. 85(PA).
    • Handle: RePEc:eee:jrpoli:v:85:y:2023:i:pa:s030142072300658x
    DOI: 10.1016/j.resourpol.2023.103947
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    Keywords

    Resources rents; Energy; Growth; Method of moments quantile regression;
    All these keywords.

    JEL classification:

    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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