The Economic Value of Natural Resources and Its Implications for Pakistan’s Economic Growth

Abstract

Natural resources and ecological services provide the foundation for manufactured capital, increasing public financing and decreasing inequality by diversifying the economy. The exploitation of natural resources is frequently the backbone of economic stability in developing and middle-income nations. As a result of their importance, natural resources need vigilant and long-term management. Recent research has tested two hypotheses, the natural resource blessing hypothesis and the natural resource curse hypothesis, on the impact of a country’s natural resources on its economy. This research is an essential contribution to the growing body of work that attempts to quantify natural resource endowments’ role in national economic growth. Investigations focus on Pakistan and span the years 1975 through 2020. Robust Least Square (RLS) estimations show that coal rents, energy use, inbound FDI, and oil rents contribute to a country’s economic growth. While consumption of renewable energy sources and industrial value-added have a detrimental effect. Natural resources, foreign direct investment, energy consumption, and industrial ecology are predicted to significantly impact economic growth during the next decade, according to the Impulse Response Function (IRF) and the Variance Decomposition Analysis (VDA). The findings may provide helpful information for academic and governmental institutions to develop natural resource management policies for sustainable development.

Economic security of regions: A prerequisite for diversifying the Azerbaijan economy

“…The results obtained in this study align with modern research on economic diversification and its impact on economic security. The studies of Shah et al (2022), Bassey, Ugboaku, and Peter (2020), and Yoshino et al (2021) support the notion that investing in Manufacturing, Construction, Agriculture, forestry, fishing, and trade can positively affect economic security. But these studies did not reflect a diversified approach considering the regional economy.…”

“…This, in turn, can lead to a process of "de-industrialization" as non-resource sectors become less competitive and lose market share, resulting in a shift of resources towards the booming resource sector. Subsequent research by Shah et al (2022), Lashitew, Ross, and Werker (2021), and Singh et al (2023 extended the analysis of the Dutch disease to other resourcerich countries. The studies highlighted that the Dutch disease could adversely impact economic security by weakening non-resource sectors and increasing reliance on volatile commodity exports.…”

“…Contemporary researchers Shah et al (2022) have explored the heterogeneous impact of the Dutch disease on various economic sectors. While the manufacturing sector is often considered the most vulnerable, studies, have shown that other sectors, such as agriculture and services, can also be affected.…”

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