Testing the Existence of Natural Resource Curse in Indonesia: The Role of Financial Development

Natural resources may become a blessing that can contribute to societies’ welfare increases. Yet natural resource abundance could also become a curse for countries’ economic development. Numerous studies have investigated the relationship between natural resources and economic performance. However,...

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Autores principales:	Sedwivia Ridena, Nurarifin Nurarifin, Wawan Hermawan, Ahmad Komarulzaman
Formato:	article
Lenguaje:	EN
Publicado:	Universitas Muhammadiyah Yogyakarta 2021
Materias:	natural resource curse financial development economic growth economic development Economic theory. Demography HB1-3840
Acceso en línea:	https://doaj.org/article/a8232025059d4d2a869942c36e2b018f
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spelling	oai:doaj.org-article:a8232025059d4d2a869942c36e2b018f2021-11-05T03:54:11ZTesting the Existence of Natural Resource Curse in Indonesia: The Role of Financial Development1411-99002541-550610.18196/jesp.v22i2.10977https://doaj.org/article/a8232025059d4d2a869942c36e2b018f2021-10-01T00:00:00Zhttps://journal.umy.ac.id/index.php/esp/article/view/10977https://doaj.org/toc/1411-9900https://doaj.org/toc/2541-5506Natural resources may become a blessing that can contribute to societies’ welfare increases. Yet natural resource abundance could also become a curse for countries’ economic development. Numerous studies have investigated the relationship between natural resources and economic performance. However, the results remain ambiguous and have no consensus in the literature. In specific, most literature focused only on testing the curse’s existence, while studies that involve the role of financial development in mediating the nexus remain scarce. To the best of our knowledge, this is a pioneer study in a developing country endowed by natural resources. Using panel data of 33 provinces from 2012 to 2018, this study implements the Generalized Method of Moments (GMM) technique to examine the existence of the natural resource curse and scrutinize the role of financial development in mitigating the curse. Results show that Indonesia potentially experiences a natural resource curse. Nonetheless, the negative effect of natural resources on economic growth could be mitigated by enhancing the role of financial development to reach a certain threshold over economic output. This study recommends policymakers to not only increase financial development across the provinces but also pay more serious attention to other factors causing the natural resource curse in Indonesia.Sedwivia RidenaNurarifin NurarifinWawan HermawanAhmad KomarulzamanUniversitas Muhammadiyah Yogyakartaarticlenatural resource cursefinancial developmenteconomic growtheconomic developmentEconomic theory. DemographyHB1-3840ENJurnal Ekonomi & Studi Pembangunan, Vol 22, Iss 2, Pp 213-227 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	natural resource curse financial development economic growth economic development Economic theory. Demography HB1-3840
spellingShingle	natural resource curse financial development economic growth economic development Economic theory. Demography HB1-3840 Sedwivia Ridena Nurarifin Nurarifin Wawan Hermawan Ahmad Komarulzaman Testing the Existence of Natural Resource Curse in Indonesia: The Role of Financial Development
description	Natural resources may become a blessing that can contribute to societies’ welfare increases. Yet natural resource abundance could also become a curse for countries’ economic development. Numerous studies have investigated the relationship between natural resources and economic performance. However, the results remain ambiguous and have no consensus in the literature. In specific, most literature focused only on testing the curse’s existence, while studies that involve the role of financial development in mediating the nexus remain scarce. To the best of our knowledge, this is a pioneer study in a developing country endowed by natural resources. Using panel data of 33 provinces from 2012 to 2018, this study implements the Generalized Method of Moments (GMM) technique to examine the existence of the natural resource curse and scrutinize the role of financial development in mitigating the curse. Results show that Indonesia potentially experiences a natural resource curse. Nonetheless, the negative effect of natural resources on economic growth could be mitigated by enhancing the role of financial development to reach a certain threshold over economic output. This study recommends policymakers to not only increase financial development across the provinces but also pay more serious attention to other factors causing the natural resource curse in Indonesia.
format	article
author	Sedwivia Ridena Nurarifin Nurarifin Wawan Hermawan Ahmad Komarulzaman
author_facet	Sedwivia Ridena Nurarifin Nurarifin Wawan Hermawan Ahmad Komarulzaman
author_sort	Sedwivia Ridena
title	Testing the Existence of Natural Resource Curse in Indonesia: The Role of Financial Development
title_short	Testing the Existence of Natural Resource Curse in Indonesia: The Role of Financial Development
title_full	Testing the Existence of Natural Resource Curse in Indonesia: The Role of Financial Development
title_fullStr	Testing the Existence of Natural Resource Curse in Indonesia: The Role of Financial Development
title_full_unstemmed	Testing the Existence of Natural Resource Curse in Indonesia: The Role of Financial Development
title_sort	testing the existence of natural resource curse in indonesia: the role of financial development
publisher	Universitas Muhammadiyah Yogyakarta
publishDate	2021
url	https://doaj.org/article/a8232025059d4d2a869942c36e2b018f
work_keys_str_mv	AT sedwiviaridena testingtheexistenceofnaturalresourcecurseinindonesiatheroleoffinancialdevelopment AT nurarifinnurarifin testingtheexistenceofnaturalresourcecurseinindonesiatheroleoffinancialdevelopment AT wawanhermawan testingtheexistenceofnaturalresourcecurseinindonesiatheroleoffinancialdevelopment AT ahmadkomarulzaman testingtheexistenceofnaturalresourcecurseinindonesiatheroleoffinancialdevelopment
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Testing the Existence of Natural Resource Curse in Indonesia: The Role of Financial Development

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