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Asymmetric role of natural resources dependence, industrialization, and foreign direct investment in China’s economic growth

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  • Huang, Yongming
  • Faraz Raza, Syed Muhammad
  • Usman, Muhammad

Abstract

China’s industrial sector is performing continuously in economic activity, aiding its share in the economy's progression. This study aims to analyze the asymmetric positive-negative shocks' influence of industrial value-added, foreign direct investment, technological innovation and natural resources on China's economic growth. We take the data of the concerned indicators from 1986 to 2019 and apply N-ARDL on the model for empirical short and long-run asymmetric estimation. The findings illustrate the positive effect of industrial value-added on economic growth during positive shock and adverse during negative shock. Similarly, technological innovation is affirmative in the acquisition of economic growth in both conditions of positive-negative shock. In contrast, foreign direct investment and natural resource rents have no growth implication during positive shock, while adversative during negative shock in the short and long run. The error correction term has stabilized the error that arises from the short to the long run. At the same time, asymmetric multiplier plots demonstrate a new equilibrium equation of asymmetric adaptations of economic growth after the positive-negative shocks. In the end, result-based suggestions recommend government and policymakers' attention toward heavy and secondary industries, technology-intensive policies, and adaptation of sustainable resources.

Suggested Citation

  • Huang, Yongming & Faraz Raza, Syed Muhammad & Usman, Muhammad, 2023. "Asymmetric role of natural resources dependence, industrialization, and foreign direct investment in China’s economic growth," Resources Policy, Elsevier, vol. 85(PB).
    • Handle: RePEc:eee:jrpoli:v:85:y:2023:i:pb:s0301420723006438
    DOI: 10.1016/j.resourpol.2023.103932
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