The driving factors of economic growth divergence in resource-rich countries

Growth divergence in resource-rich countries extends the debate over the resource curse hypothesis. The present study examines the relationship between natural resources and economic growth and its transmission channel, with panel data from 95 countries and between 1970 and 2017. It applies two different models such as Panel CS-ARDL and System-GMM to obtain a robust result of the relationship between natural resources and economic growth. The novelty of this study lies in the fact that it attempts to explain the growth divergence in resource-rich countries by examining the impact of natural resources on economic growth and its transmission channels for each per capita income group. CS-ARDL model does not confirm the results from system-GMM, which indicates the existence of resource curse for the panel of all countries. The other results from CS-ARDL support the evidence for the resource curse only in the low income countries and the blessing hypothesis in the developed ones. Low investment and poor total factor productivity are shown to be among the transmission channel of the negative impact of natural resource on economic growth in the developing country.