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Spatial Nexus: Natural Resources and Economic Growth

Author

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  • Mingze Marcellus Li

    (University of Guelph)

  • Thanasis Stengos

    (University of Guelph)

  • Yiguo Sun

    (University of Guelph)

Abstract

The “Resource Curse" phenomenon has been a central theme in resource economic research over the past few decades, with numerous studies highlighting the paradox where countries rich in natural resources experience slower economic growth. This paper revisits this critical issue by examining the relationship between natural resource rents and economic growth, specifically in non-OECD countries. Given that many of these nations are both resource-rich and characterized by relatively low economic growth, this study employs a spatial Durbin model to provide a nuanced understanding of the impact of resource rents on economic performance. Our findings reinforce the notion of the “Resource Curse," revealing that, in most cases, resource rents exert a detrimental effect on economic growth, thereby exacerbating the economic challenges faced by these countries. In addition, the results reveal that when the “Resource Curse" emerges, not only the home country but also neighboring countries are likely to be harmed. The results underscore the importance of effective resource management and policy interventions to mitigate the adverse effects of resource dependence on long-term economic development.

Suggested Citation

  • Mingze Marcellus Li & Thanasis Stengos & Yiguo Sun, 2025. "Spatial Nexus: Natural Resources and Economic Growth," Empirical Economics, Springer, vol. 69(3), pages 1117-1152, September.
    • Handle: RePEc:spr:empeco:v:69:y:2025:i:3:d:10.1007_s00181-025-02775-4
    DOI: 10.1007/s00181-025-02775-4
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment

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