Reinvestigating the impact of natural resource rents on carbon emissions: Novel insights from geopolitical risks and economic complexity

Abstract

Understanding the relationship between natural resource rents and carbon emissions is crucial for achieving a balance between economic development and environmental sustainability. This study reinvestigates the impact of natural resource rents on carbon emissions and explores the threshold effects of geopolitical risks and economic complexity, aiming to provide a more comprehensive understanding of their relationship. Based on an empirical analysis of panel data from 38 countries between 1995 and 2021, the conclusions are as follows. (i) The panel ARDL estimation results reveal that natural resource rents increase carbon emissions over the long term, with this finding remaining robust after addressing endogeneity. (ii) The DPTR model results indicate that natural resource rents have a non-linear impact on carbon emissions, shaped by geopolitical risks and economic complexity. As geopolitical risks escalate, the effect of resource rents on carbon emissions shifts from a reduction to an increase. On the contrary, rising economic complexity reverses this impact, causing natural resource rents to reduce carbon emissions. (iii) Heterogeneity analysis results demonstrate that only the impact of oil and natural gas rents on carbon emissions is affected by high geopolitical risks. Additionally, in contexts of high economic complexity, oil, natural gas, and forest rents help reduce carbon emissions, while coal and mineral rents have a negative impact. Finally, policy implications for global resource management and environmental sustainability that combine geopolitical risk and economic complexity are proposed.