Short-term effects of national-level natural resource rents on life expectancy: A cross-country panel data analysis

Abstract

While a substantial amount of literature addresses the relationship between natural resources and economic growth, relatively little is known regarding the relationship between natural resource endowment and health at the population level. We construct a 5-year cross-country panel to assess the impact of natural resource rents on changes in life expectancy at birth as a proxy indicator for population health during the period 1970–2015. To estimate the causal effects of interest, we use global commodity prices as instrumental variables for natural resource rent incomes in two-stage-least squares regressions. Controlling for country and year fixed effects, we show that each standard deviation increase in resource rents results in life expectancy increase of 6.72% (CI: 2.01%, 11.44%). This corresponds to approximately one additional year of life expectancy gained over five years. We find a larger positive effect of rents on life expectancy in sub-Saharan Africa (SSA) compared to other world regions. We do not find short-term effects of rents on economic growth, but show that increases in resource rents result in sizeable increases in government revenues in the short run, which likely translate into increased spending across government sectors. This suggests that natural resources can help governments finance health and other development-oriented programs needed to improve population health.

Factors affecting economic growth: empirical evidence from developing countries

“…Besides, the directional relationship between GDP growth and total natural resources rents seems consistent with the study of Lyatuu et al (2021). They indicated that an increase in resource rents leads to a substantial increase in government income in the short term, which can transpose into government spending.…”

Natural Resource Extraction, Ecosystem Services and Population Health: An Empirical Test of 170 Countries, 1990-2019

“…But we nd no reason to believe the global growth rate increases health except through economic effects in the resource extracting countries. This replication allows us to assess how much Lyatuu et al's (Lyatuu et al, 2021) results agree with ours. The commodity price index is the equally weighted average of the price index for agricultural goods, energy, and minerals and metals (including precious metals) taken from the International Monetary Fund´s (IMF) database (see https://www.imf.org/en/Research/commodity-prices).…”

“…Our data setup and method differ from one recent study that shows energy and mineral resource dependency positively affects life expectancy (Lyatuu et al, 2021), using basic life expectancy data, not HALE as we do. They estimated the ratio of resource rents to GDP on life expectancy in a two-way, xedeffects setup using a two-stage instrumental-variables estimation strategy.…”

“…We prefer to estimate levels on levels, rather than on the rate of increase, because population health changes slowly and because already-high levels of health change far slower than low levels due to ceiling effects. Lyatuu et al (Lyatuu et al, 2021) plausibly argue that global commodity prices can instrument for resource rents, but they do not address whether this instrument satis es the instrument-exclusion criterion, or that the instrument does not directly affect life expectancy. In years of high global prices human health may be affected in countries without access to dear resources.…”

“…First, natural resources extraction: their availability enables society to harvest them for economic bene t, thus increasing population wellbeing (health, longevity, reduction of morbidity). This process enables access to nance for all purposes that society values, from good health to better environmental standards and even decarbonization (OECD, 2009;Lyatuu et al, 2021;Hausmann, 2022). But this is not how it is observed to work out even in well-studied rich-world contexts.…”