Unlocking the potential of natural resources: Transforming the resource curse into a sustainable development corridor through research and development

Abstract

This paper investigates the nexus between China's natural resource rents and R&D expenditure from 1989 to 2021, considering economic growth as a confounding variable. The analysis employs an array of time series methodologies such as the DF-GLS for unit root testing and the Johansen cointegration test for assessing long-term cointegration. The findings indicate a long-term cointegration among the first-order integrated variables (I(1)). Notably, the data reveals an asymmetric impact of natural resource rents on long-term R&D investments. Specifically, rents from coal and natural gas positively influence R&D spending, whereas forest rents appear to adversely affect it, as evidenced by the FMOLS, DOLS, and CCR methods. However, when accounting for structural breaks using the Least Squares method, the overall effect of natural resource rents on R&D appears detrimental, with coal rents' significance becoming ambiguous. Furthermore, economic growth consistently exerts a positive, significant influence on R&D expenditures, irrespective of the structural breaks considered. The robustness of these findings is confirmed through a robust regression analysis, which aligns with the results derived from the primary methods.