The role of human capital, institutional quality and globalization in the relationship between natural resource wealth/scarcity and economic growth

The relationship between natural resource abundance and economic growth remains a significant subject of debate for both developed and developing countries. This study examines the impact of natural resources on economic growth using a comprehensive dataset covering 143 countries over the period 1996–2020. It also analyzes the moderating roles of human capital, institutional quality, and globalization in this relationship. To highlight the differences between developed and developing countries, the analysis is conducted on two separate sample groups. The study employs the Method of Moments Quantile Regression (MMQR) and applies Fixed Effects and Pooled OLS models to ensure the robustness of the results. The findings reveal that the effects of natural resources on economic growth vary depending on the level of development of a country. In developed countries, natural resources contribute positively to growth, whereas in developing countries, the phenomenon known as the "resource curse" is prevalent, where natural resources negatively affect economic growth. However, improvements in human capital and institutional quality are found to mitigate or even reverse these adverse effects. Moreover, the impact of globalization on the resource-growth relationship enhances the contribution of natural resources to growth in developed countries, while it can exacerbate the negative effects of resource dependence in developing countries. These findings emphasize that investments in education and innovative sectors in developing countries can alleviate the adverse impacts of resource dependence. The study highlights the importance of long-term policies to maximize the contribution of natural resource wealth to economic growth.