The Threshold Effect of Economic Complexity on Natural Resource Dependency in MENA Countries

Document Type : Original Article

Author

Ph.D., Department of Economics, Faculty of Economics and Administrative, University of Lorestan, Khoram Abad, Iran.

Abstract

The main purpose of this research is to answer whether increasing economic complexity is a suitable solution to reduce dependence on natural resources in MENA countries. In this regard, using information and statistical data of 11 countries of this region from 2000 to 2022, the threshold impact of economic complexity on natural resource dependency has been investigated at the total and disaggregated levels. The results confirm the threshold impact of economic complexity on the total natural resources rent, oil rent, natural gas rent, and forest rent and its insignificant effect on mineral rent. Based on the calculated threshold level, the impact of economic complexity on the total natural resources rent and oil rent is negative, and the impact of economic complexity on natural gas rent and forest rent is inverted U-shaped and U-shaped, respectively. The average marginal impact of economic complexity on the total natural resources rent, oil rent, natural gas rent, and forest rent is estimated to be about -19.09, -17.88, -1.09, and 0.01, respectively. Based on this, it can be said that economic complexity reduces dependence on energy sources in the studied countries.

Keywords

Main Subjects

References

  1. Ahmed, Z., Asghar, M., Malik, M. & Nawaz, K. (2020). Moving towards a sustainable environment: the dynamic linkage between natural resources, human capital, urbanization, economic growth, and ecological footprint in China. Resources Policy, 67. https://doi.org/10.1016/j.resourpol.2020.101677
  2. Alavi, F. S., & Dahmardeh Ghaleno, N. (2023). Institutional quality, economic complexity, and the curse of natural resources; New evidence from MENA countries. Macroeconomics Research Letter, 18(37), 139-160. doi: 10.22080/iejm.2023.26452.2024 (in Persian)
  3. Alvarado, R., Tillaguango, B., Dagar, V., Ahmad, M., Isık, C., Mendez, P. & Toledo, E. (2021(. Ecological footprint, economic complexity and natural resources rents in Latin America: empirical evidence using quantile regressions. Journal of Cleaner Production, 318. https://doi.org/10.1016/j.jclepro.2021.128585
  4. Ampofo, G. M. K.; Jinhua, C.; Bosah, P. C.; Ayimadu, E. T. & Senadzo, P. (2021). Nexus between total natural resource rents and public debt in resource-rich countries: A panel data analysis. Resources Policy, 74. https://doi.org/10.1016/j.resourpol.2021.102276
  5. Ashrafi, H. & Sayehmiri, A. (2024). The impact of globalization and economic complexity on natural resource rents in Mena countries. Regional Planning. doi: 10.30495/jzpm.2022.29588.4028 (in Persian)
  6. Ben Youssef, A., Boubaker, S. & Omri, A. (2018). Entrepreneurship and sustainability: the need for innovative and institutional solutions. Technological Forecasting and Social Change, 129, 232-241. https://doi.org/10.1016/j.techfore.2017.11.003
  7. Breslow, N. E. & Clayton, D. G. (1993). Approximate Inference in Generalized Linear Mixed Models. Journal of the American Statistical Association, 88, 9-25. https://doi.org/10.1080/01621459.1993.10594284
  8. Can, M. & Ahmed, Z. (2023). Towards sustainable development in the European Union countries: does economic complexity affect renewable and nonrenewable energy consumption? Sustain. Dev, 31(3), 439-451.
  9. Canh, N., Schinckus, C., Thanh, S. (2020). The natural resources rents: is economic complexity a solution for resource curse? Resources Policy, 69. https://doi.org/10.1016/j.resourpol.2020.101800
  10. Dogan, B., Driha, O. M., Balsalobre Lorente, D. & Shahzad, U. (2021). Mitigating the effects of economic complexity and renewable energy on carbon emissions in developed countries. Sustainable Development, 1-12. https://doi.org/10.1002/sd.2125
  11. Dogan, E. & Inglesi-Lotz, R. (2017). Analyzing the effects of real income and biomass energy consumption on carbon dioxide (CO2) emissions: empirical evidence from the panel of biomass-consuming countries. Energy, 138, 721-727. https://doi.org/10.1016/j.energy.2017.07.136
  12. Douglas, E. & Prentice, C. (2019). Innovation and profit motivations for social entrepreneurship: a fuzzy-set analysis. Journal of Business Research, 99, 69-79. https://doi.org/ 10.1016/j.jbusres.2019.02.031
  13. Eissa, M. A. & Elgammal, M. M. (2019). Foreign direct investment determinants in oil exporting countries: Revisiting the role of natural resources, Journal of Emerging Market Finance, 19(1). https://doi.org/10.1177/0972652719880153
  14. Fuentelsaz, L., Maicas, J. P. & Montero, J. (2018). Entrepreneurs and innovation: the contingent role of institutional factors. International Small Business Journal: Researching Entrepreneurship, 36(6), 686-711. https://doi.org/10.1177/0266242618766235
  15. Galinato, G. I. & Galinato, S. P. (2016). The effects of government spending on deforestation due to agricultural land expansion and CO2-related emissions. Ecological Economics, 12, 43-45. https://doi.org/10.1016/j.ecolecon.2015.10.025
  16. Golkhandan, A. (2023). The asymmetric effect of oil rent on public debt in Iran. Public Sector Economics Studies, 2(3), 269-292. doi: 10.22126/pse.2023.9740.1062 (in Persian)
  17. Golkhandan, A. & Mohammadian Mansour, S. (2021). Relationship between natural resources types and internal conflict risk in the MENAP region countries in the context of the political resources curse. Journal of Economic Modeling Research, 12(46), 211-256. URL: http://jemr.khu.ac.ir/article-1-2287-fa.html (in Persian)
  18. Hausmann, R., Hwang, J. & Rodrik, D. (2007). What you export matters. Journal of Economic Growth Growth, 12(1), 1-25.
  19. He, Y., Wang, S., Chen, N. (2024). Mineral rents, natural resources depletion, and ecological footprint nexus in high emitting countries: Panel GLM analysis. Resources Policy, 89. https://doi.org/10.1016/j.resourpol.2023.104472
  20. Hidalgo, C. A., Hausmann, R. (2009). The building blocks of economic complexity. Proceedings of the National Academy of Science, 106(26), 10570-10575. https://doi.org/10.1073/pnas.090094310
  21. Hidalgo, C., Klinger, B., Barabasi, A. & Hausmann, R. (2007). The product space conditions the development of nations. Science, 317(5837), 482-487. doi: 10.1126/science.1144581
  22. Hodler, R. (2006). The curse of natural resources in fractionalized countries. European Economic Review. 50(6), 1367-1386. https://doi.org/10.1016/j.euroecorev.2005.05.004
  23. Ivanova, I., Strand, Ø., Kushnir, D. & Leydesdorff, L., (2017). Economic and technological complexity: a model study of indicators of knowledge-based innovation systems. Technological Forecasting and Social Change, 120, 77-89. https://doi.org/10.1016/j. techfore.2017.04.007
  24. Le, T. & Le Van, C. (2018). Research and development and sustainable growth over alternative types of natural resources. Economic Modelling, 70, 215-229. https://doi.org/ 10.1016/j.econmod.2017.11.008
  25. Li, Z., Dogan. P., Ghosh, S., Chen, W-M. & Balsalobre Lorente, D. (2024). Economic complexity, natural resources and economic progress in the era of sustainable development: Findings in the context of resource deployment challenges, Resources Policy, 88. https://doi.org/10.1016/j.resourpol.2023.104504
  26. Matthews, C. H. & Brueggemann, R. (2015). Innovation and entrepreneurship: A competency framework. Routledge.
  27. Mostolizadeh, S. M. & Salimi, L. (2021). Relationship between economic complexity index and human development index in developed and developing countries. Journal of Economic Research (Tahghighat- E- Eghtesadi), 55(4), 853-886. doi: 10.22059/jte.2021.319070.1008434 (in Persian)
  28. Nademi, Y., & Dalvandi, M. (2023). The impact of economic complexity on poverty in developing countries and providing suggestions for the government's role in reducing poverty. Public Sector Economics Studies, 2(1), 1-18. doi: 10.22126/pse.2023.8920.1025 (in Persian)
  29. Pazham, S. M. & Salimifar, M. (2016). Examining economic complexity index effect on economic growth in the top 42 countries producing science. Journal of economics and regional development, 22(10), 16-38. doi: 10.22067/erd.v22i10.41690 (in Persian)
  30. Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels, Cambridge Working Papers in Economics, No. 0435.
  31. Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics, 22(2), 265-312. https://doi.org/10.1002/jae.951
  32. Pesaran, M. H. & Yamagata, T. (2008) Testing slope homogeneity in large panels. Journal of Econometrics, 142 (1), 50-93. https://doi.org/10.1016/j.jeconom.2007.05.010
  33. Pintea, M. &Thompson, P. (2007). Technological complexity and economic growth. Review of Economic Dynamics. 10(2), 276-293. https://doi.org/10.1016/j.red.2006.12.001
  34. Poelhekke S., & Van Der Ploeg F. (2013). Do natural resources attract non resource FDI? The Review of Economics and Statistics, 95(3), 1047-1065.
  35. Sachs, J. D. & Warner, A. M. (1995). Natural resource abundance and economic growth (No. W5398). National Bureau of Economic Research.
  36. Sachs, J. D. & Warner, A. M. (2001). The curse of natural resources. European Economic Review, 45, 827-838. https://doi.org/10.1016/S0014-2921(01)00125-8
  37. Shadab, S. (2021). The nexus between export diversification, imports, capital and economic growth in the United Arab Emirates: an empirical investigation. Cogent Economics & Finance, 9(1). https://doi.org/10.1080/23322039.2021.1914396
  38. Tacchella, A., Cristelli, M., Caldarelli, G., Gabrielli, A. & Pietronero, L. (2013). Economic complexity: conceptual grounding of a new metrics for global competitiveness. J. Econ. Dynam. Contr. 37(8), 1683-1691. https://doi.org/10.1016/j. jedc.2013.04.006
  39. Ul-Durar, S., Arshed, N., Anwar, A., Sharif, A. & Liu, W. (2023). How does economic complexity affect natural resource extraction in resource-rich countries? Resources Policy, 86. https://doi.org/10.1016/j.resourpol.2023.104214
  40. Xin, Y., Ajaz, T., Shahzad, M. & Luo, J. (2023). How productive capacities influence trade adjusted resources consumption in China: testing resource-based EKC. Resources Policy, 81. https://doi.org/10.1016/j.resourpol.2023.103329
  41. Xuan, D., Jiang, X., Fang, Y. )2023(. Can globalization and the green economy hedge natural resources? Functions of population growth and financial development in BRICS countries. Resources Policy, 82, 103414. https://doi.org/10.1016/j. resourpol.2023.103414
  42. Yilanci, V., Aslan, M. & Ozgur, O. (2021). Disaggregated analysis of the curse of natural resources in most natural resource-abundant countries. Resources Policy, 71. https://doi.org/10.1016/j.resourpol.2021.102017

Files

Share

How to cite

Statistics