What are the mistakes we think are correct about the Natural resource curse' hypothesis? New insights from quantile regressions via method of moments for EU

Abstract

The nexus among natural resources and economic growth has recently been extensively studied in the context of the "Natural Resource Curse (NRC)" hypothesis. It is critical to use the latest analysis techniques in the development of the relevant literature. Therefore, this study aims to test the NRC hypothesis in EU member countries applying the Method of Moments Quantile Regression. Moreover, the focus of this study on EU countries for the first time fills an important gap in the literature. Renewable energy consumption, gross fixed capital formation, and urbanization are adopted as control variables. The findings demonstrate the validity of the NRC hypothesis at all quantile levels. Renewable energy consumption contributes to economic growth up to 0.70 quantile level. Additionally, gross fixed capital formation and urbanization have a positive impact on growth at all quantile levels. Empirical outputs highlight the importance of natural resources for growth in EU member countries and raise suggestions for possible policy formulation and implementation processes.