Resource rents and inclusive human development in developing countries

Abstract

This study aims to empirically verify the effects of natural resource rents on inclusive human development in developing countries. The results from the IV Tobit regression show that natural resource rents have a positive direct effect on inclusive human development in developing countries and that this relationship varies by regional groupings, income levels, level of development and export structure. Looking at the transmission mechanisms, when the interactive variables of governance and environmental quality is introduced, the modulating channel through governance exerts a robust negative synergy effect in the sample of developing countries and positive synergy effects for Africa and low-income countries. When the interactive variable of CO2 emissions is introduced for Africa, a negative net effect of natural resource rents on inclusive human development is obtained. This was up to a policy threshold of 25.4412 of CO2 emissions when the negative effect is nullified. For Asia and the Latin America and Caribbean, a positive net effect is obtained. This is up to a CO2 emissions threshold of 29.038 and 3.6752 respectively, when the positive effect is nullified. Besides, the high income and the upper-middle income countries produce a negative net effect of resource rents on inclusive human development through CO2 modulation, with up to positive CO2 emission thresholds of 37.9365 and 23.6257 respectively. Policy implications are highlighted. In summary, contingent on engaged specificities, where conditional effects are negative, negative thresholds for complementary policies have been provided and in scenarios where conditional impacts are positive, actionable positive thresholds have been provided.

Linear and non‐linear effects of infrastructures on inclusive human development in Africa

“…The authors found positive net impacts on inclusive development from the interactions between educational quality and mobile phones. Similar results have been found in a recent study by Nchofoung et al (2021).…”

“…A negative sign is expected to be associated with this variable. Nchofoung et al (2021) found a positive direct effect of natural resource rents on inclusive human development in developing countries. This variable is thus expected to have a positive sign.…”

“…The dependent variable is the inclusive development proxied by the inequality-adjusted HDI. This has been used in earlier works to measure inclusive human development, including the works of Asongu and Le Roux (2017) and that of Nchofoung et al (2021). In the light of these studies, the HDI is the average of three principal dimensions, namely: health and long life, knowledge and basic living standards.…”

“…Conclusively, investment in infrastructures, if properly utilized, would improve inclusive human development. However, studies on the explanatory factors of inclusive human development in Africa have been largely limited to: foreign development aid (Asongu & Nwachukwu, 2018); governance and environmental quality (Asongu & Odhiambo, 2020a); ICT (Asongu & Nwachukwu, 2017); external flows (Asongu & Leke, 2019); social media (Asongu & Odhiambo, 2021) and natural resources rents (Nchofoung et al, 2021). To the best of our knowledge, no study has attempted to establish the effect of infrastructural development on inclusive human development.…”

Can the resource curse be avoided? An empirical examination of the nexus between crude oil price and economic growth

“…Although this result disagrees with the findings of Omolade et al ( 2019 ), it is consistent with the findings of Omojolaibi and Egwaikhide ( 2013 ) and Akanni ( 2007 ). Besides, unlike Deaton ( 1999 ) and Nchofoung et al ( 2021 ) who found a positive nexus between natural resource wealth and socioeconomic development, a number of studies have concluded that natural resource exploitation constitutes a major hindrance to the socioeconomic development of African countries (Carmignani and Avom 2010 ; Sachs and Warner 1995 ).…”