Fifteenth International Conference on Environmental, Cultural, Economic & Social Sustainability

Abstract

The objective of this research is to examine and compare the relationship between natural resource rents and economic welfare in global countries, resource-rich countries, and income level-based resource-rich countries. Using panel data regression analysis with a fixed effect clustering for a twenty year period (1996 to 2015), institutional quality and foreign direct investment (FDI) are considered in the study as both independent variables and moderating variables relevant to natural resource rents and economic welfare. This study found that in global countries, the rents generated from natural resource sectors appear to have an ambiguous impact on economic welfare but not to have any impact in the resource-rich countries group. After grouping the resource-rich countries, negative impacts appear to exist in low and lower-middle income, resource-rich countries. In upper-middle income, resource-rich countries natural resource rents likely have no impact, while in high income, resource-rich countries, they seem to have positive impact. This study also found that the dimensions of institutional quality appear to have significant direct and indirect effects on economic welfare. FDI appears to have a negative direct effect on economic welfare in low and lower-middle and upper-middle income, resource-rich countries only, but a strengthening effect on the resource-welfare relationship in global countries. The findings seem to show that natural resource curse does not always exist and that the impacts of FDI and institutional quality on the resource-welfare relationship are varied in each group of countries.