Resource curse or resource blessing: Perspective on the nonlinear and regional relationships in China

This study utilizes the system generalized method of moments (SYS-GMM) model to measure the impact of resource dependence on economic development on the panel data of 236 prefecture-level cities in China from 2005 to 2018 and finds a complex nonlinear M-shaped trend, indicating that some regions enjoy resource blessing, while others suffer resource curse. A series of robustness tests show that the M-shaped trend holds. Heterogeneity analysis reveals that resource blessings benefit growing resource-based cities, while the resource curses trap declining resource-based cities in a dilemma. In addition, resource dependence has a significantly negative spillover effect on economic development in the short run and a positive total effect in the long run. Resource dependence imposes a negative effect on economic development by inhibiting the upgrading of industrial structure and crowding out R&D, while the continuous rise of human capital accumulation is an important channel to break the resource curse.

Automated summary

This study examines the impact of resource dependence on economic development in prefecture-level cities in China. The results show that resource blessing and resource curse exist in different regions, where resource blessing benefits growing resource-based cities while resource curse traps declining resource-based cities. Additionally, resource dependence has a negative short-term effect on economic development but a positive long-term effect. The study suggests that resource dependence hinders industrial upgrading and R&D, while the accumulation of human capital is crucial to break the resource curse.