Does natural resource dependence restrict green development? An investigation from the "Belt and road" countries.

ABSTRACT

Addressing natural resource dependence is integral to achieving the Sustainable Development Goals by promoting economic diversification, environmental sustainability, and climate resilience. This study explores the effect of natural resource dependence on green development by adopting the balanced panel dataset from the "Belt and Road" countries from 2005 to 2019. Notably, the novelty of our analysis lies in the empirical analysis using instrument-based techniques that consolidate the "green development curse hypothesis" in the Belt and Road countries. The mechanism analysis reveals that natural resource dependence curbs green development by weakening innovative capability, disturbing institutional quality, reducing population density, and crowding out human capital. Further, the dynamic panel threshold model handling endogeneity verifies the nonlinear relationship between natural resource dependence and green development. Interestingly, digital trade offers greater "resilience" than traditional trade, correcting the resource curse dilemma. Finally, heterogeneity analyses indicate that the green development curse hypothesis only exists in countries with high-level environmental regulations and resource-based countries.