China's resources curse hypothesis: Evaluating the role of green innovation and green growth

Recently, policymakers and scholars have been uncertain about the role that natural resources (TNRR) play in development due to the contradictory evidence in the existing literature. This study aims to investigate the true relationship between TNRR and economic growth in China from 1991 to 2014. This study also considers various green innovations and renewable energy as control variables. The estimated results asserted that the cointegration exists between economic growth (GDP), TNRR, environmentally adjusted multifactor productivity growth (EAMFPG), development of environmentally related technological innovation, and renewable energy consumption (REC). Besides, the novel moment quantile regression method is used to determine each variable's long-run elasticities, where TNRR is found to be negatively related to the GDP - validating China's natural resource curse paradox. Also, EAMFPG, DERTI, and REC adversely affect the GDP in the region. The results are robust as validated by the long-run estimators: fully modified ordinary least square, dynamic ordinary least square, and canonical cointegration regression. This study suggests the sustainable extraction of natural resources with the appropriate intervention of regulatory authorities and investment in environmentally-related technologies and renewable energy sectors to attain sustainable development.

Automated summary

Recently, there has been uncertainty among policymakers and scholars regarding the role of natural resources in development due to conflicting evidence in existing literature. This study examines the relationship between natural resources and economic growth in China from 1991 to 2014, considering green innovations and renewable energy as control variables. The results show a cointegration between economic growth, natural resources, environmentally adjusted multifactor productivity growth, environmentally related technological innovation, and renewable energy consumption. The study also reveals a negative relationship between natural resources and GDP, confirming China's natural resource curse paradox. Additionally, environmentally adjusted multifactor productivity growth, development of environmentally related technological innovation, and renewable energy consumption have adverse effects on GDP in the region. The findings are robust, as validated by various long-run estimators. The study suggests sustainable extraction of natural resources and investment in environmentally-related technologies and renewable energy sectors for achieving sustainable development.