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Crowding-Out Effect of Natural Resources on Domestic Investment: The Importance of Information Communication and Technology (ICT) and Control of Corruption in the Middle East and Central Asia

Author

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  • Shujaat Abbas

    (Graduate School of Economics and Management (GSEM), Ural Federal University (UrFU), Mira 19, 620002 Ekaterinburg, Russia)

  • Faheem Ur Rehman

    (Business School, NingboTech University, Ningbo 315000, China)

  • Shabeer Khan

    (Department of Islamic Economics and Finance, Sakarya University, 54050 Serdivan, Turkey)

  • Mohd Ziaur Rehman

    (Department of Finance, College of Business Administration, King Saud University, Riyadh 11587, Saudi Arabia)

  • Wadi B. Alonazi

    (Health Administration Department, College of Business Administration, King Saud University, Riyadh 11587, Saudi Arabia)

  • Abul Ala Noman

    (Faculty of Management and Economics, Ruhr University Bochum (RUB), 44801 Bochum, Germany)

Abstract

Countries of the Middle East and Central Asia depend heavily on natural resources for their exports, income, and employment. This study is a preliminary investigation that explores the effect of natural resources on domestic investment in a sample of 12 highly resource-dependent countries in the Middle East and Central Asia from 2000 to 2019. The recently advanced cross-sectional dependent auto-regressive distributed lag (CS-ARDL) model and panel quantile regression are employed. The results validate the accelerator theory that an increase of the non-oil GDP growth rate has a robust positive impact on domestic investment, while natural resources crowd-out domestic investment. The long-run estimate of ICT reveals a significant positive impact, while corruption shows a significant negative effect. These findings urge sample resource-dependent countries to focus on developing ICT-based enterprises and control prevailing corruption levels. Moreover, adopting liberal trade policies can also enhance domestic investment opportunities.

Suggested Citation

  • Shujaat Abbas & Faheem Ur Rehman & Shabeer Khan & Mohd Ziaur Rehman & Wadi B. Alonazi & Abul Ala Noman, 2022. "Crowding-Out Effect of Natural Resources on Domestic Investment: The Importance of Information Communication and Technology (ICT) and Control of Corruption in the Middle East and Central Asia," Sustainability, MDPI, vol. 14(20), pages 1-16, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:20:p:13392-:d:945107
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