A Re-examination Of The "Resource Curse" Hypothesis

It’s the conflicts among rapid economic growth, a large number of naturalresource consumption and the ecological damage that constrain on China’s sustainabledevelopment. Different regions of China have quite different natural resourceendowments. The regions where are rich in natural resource have damaged theecological environment and affected the capacity for sustainable development at theexpense of resource consumption and environment pollution with the extensiveeconomic growth pattern in long term. So these areas have fallen into “ResourceCurse” which refers to the paradox that countries and regions with an abundance ofnatural resources tend to have less economic growth and worse developmentoutcomes than countries with fewer natural resources.The Resource Curse thesis was first used by Richard Auty in1993. Since then,scholars’ studies include two aspects: first, testing the “Resource Curse” hypothesis.Scholars used different parts of panel data or cross-sectional data to confirm or falsifythe "Resource Curse" hypothesis. Second, explore the pathway of “Resource Curse”.Different scholars have chosen different indicators to measure natural resourceendowments, such as arable land per capita, oil production per capita, primarycommodity exports divided by GDP et al. The paper chooses the Ecological Footprintmodel, which is popular in recent years and has been widely used, to re-measure thenatural resource endowments of provinces from2000to2009. According to theecological footprint,31provinces have been divided into three categories: first, theregions with poor natural resource (0≤EF<2), including Shanghai, Zhejiang,Guangdong, Guangxi, Fujian, Hainan, Jiangxi, Hubei, Beijing, Jiangsu, Chongqing,Hunan, Yunnan, Sichuan and Anhui; Second, the regions with general natural resources (2≤EF<5), including Guizhou, Gansu, Liaoning, Jilin, Tianjin, Hebei,Henan, Shandong, Shaanxi, Heilongjiang; Third, the regions with abundant naturalresources (EF≥5), including Qinghai, Ningxia, Tibet, Shanxi, Xinjiang and InnerMongolia.The paper uses unit root tests, panel co-integration, panel data regression modelsand other methods to study the relationship between natural resource and economicgrowth and re-tested the "Resource Curse" hypothesis. The empirical results showthat the natural resources and economic growth are not obvious negatively correlated,in other words, the "Resource Curse" does not exist in China at the provincial level.Among them, Beijing, Shanghai, Jiangsu, Zhejiang, Guangdong and other naturalresource poor regions, economic growth and natural resources are negativelycorrelated, while the regions with general and abundant natural resources such asShanxi, Inner Mongolia, Heilongjiang, Jilin, Ningxia’s economic growth and naturalresources are positively correlated. Overall, natural capital, physical capital, humancapital, technological progress, property rights system and economic development arepositively correlated, in which physical capital and economic development are mostclosely, followed by human capital, natural capital and technological progress or less,property rights system and economic development are correlated weakly. Meanwhile,the paper also falsifies the two main pathways of the "Resource Curse".Despite this falsification of the "Resource Curse" hypothesis, we need to notethat natural resources are not sufficient condition for economic growth, only therational use and management of natural resources, while improvement of physicalcapital, human capital, technological progress, and institutions, natural resourcescould play a role in supporting economic growth better.