The dynamic nexus between economic policy uncertainty, geopolitical risk, and natural resource rents of ASEAN-5 countries: Insights from the novel Fourier augmented ARDL method (FAARDL)

Abstract

This study examines the impact of economic policy uncertainty (EPU) and geopolitical risk (GPR) on natural resource rent (NR) in ASEAN-5 countries: Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Utilizing the Fourier augmented autoregressive distributed lag model (FAARDL), we analyze the long-run and short-run impacts of EPU and GPR on NR while controlling for economic growth. Our findings reveal a significant negative impact of GPR on NR across all countries, with varying degrees. EPU shows heterogeneous effects, negatively impacting NR in Indonesia and Thailand, positively affecting the Philippines, but has no significant long-run impact in Malaysia and Singapore. For countries endowed with a diverse set of resources, including both fossil fuels and energy transition minerals, as well as renewable resources such as timber, these findings highlight the need to develop robust resource management strategies. Such strategies are essential for navigating geopolitical risks and economic uncertainties.