Asymmetric role of natural resources dependence, industrialization, and foreign direct investment in China's economic growth

China's industrial sector is performing continuously in economic activity, aiding its share in the economy's progression. This study aims to analyze the asymmetric positive-negative shocks' influence of industrial valueadded, foreign direct investment, technological innovation and natural resources on China's economic growth. We take the data of the concerned indicators from 1986 to 2019 and apply N-ARDL on the model for empirical short and long-run asymmetric estimation. The findings illustrate the positive effect of industrial value-added on economic growth during positive shock and adverse during negative shock. Similarly, technological innovation is affirmative in the acquisition of economic growth in both conditions of positive-negative shock. In contrast, foreign direct investment and natural resource rents have no growth implication during positive shock, while adversative during negative shock in the short and long run. The error correction term has stabilized the error that arises from the short to the long run. At the same time, asymmetric multiplier plots demonstrate a new equilibrium equation of asymmetric adaptations of economic growth after the positive-negative shocks. In the end, result-based suggestions recommend government and policymakers' attention toward heavy and secondary industries, technology-intensive policies, and adaptation of sustainable resources.

Automated summary

This study analyzes the influence of asymmetric positive-negative shocks on China's economic growth in terms of industrial value-added, foreign direct investment, technological innovation, and natural resources. The findings show that industrial value-added has a positive effect on economic growth during positive shocks but adverse effects during negative shocks. Similarly, technological innovation contributes to economic growth regardless of the type of shock. However, foreign direct investment and natural resource rents have no impact on economic growth during positive shocks and negative effects during negative shocks. The study recommends focusing on heavy and secondary industries, technology-intensive policies, and sustainable resource adaptation.