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Resource curse or blessings hypothesis in Pakistan: The role of financial development and oil prices in era of globalization

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  • Imtiaz, Amir
  • Javid, Snober

Abstract

This paper investigated either natural resource curse hypothesis exists in Pakistan by integrating the dynamic role of financial development, globalization and oil prices into augmented production function covering the period of 1972–2021. We applied unit root test, ARDL bounds testing and Granger causality approach by including information of single unknown structural break in the series. Our empirical analysis confirms that natural resources abundance has inverse effect on economic growth i.e. nature resource curse hypothesis is valid. The supply-side effect is confirmed i.e. financial development adds to economic growth. Oil prices are inversely linked with economic growth. Capitalization, globalization and labor stimulate economic growth. The Granger causality analysis indicates the existence of bidirectional causal relationship between natural resources and economic growth. The feedback effect exists between financial development and economic growth. The unidirectional causality is found running oil prices (labor force) to economic growth. Globalization and economic growth are complementary. This paper opens new insights for policy making authorities to utilize natural resources as economic tool to boost economic growth via proper and comprehensive management of natural resources with help of financial development.

Suggested Citation

  • Imtiaz, Amir & Javid, Snober, 2023. "Resource curse or blessings hypothesis in Pakistan: The role of financial development and oil prices in era of globalization," Resources Policy, Elsevier, vol. 86(PA).
    • Handle: RePEc:eee:jrpoli:v:86:y:2023:i:pa:s0301420723009170
    DOI: 10.1016/j.resourpol.2023.104206
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