The Impact of Natural Resources on Innovation


1 Faculty of Economics and Social Sciences, University of Bu-Ali Sina, Hamedan, Iran

2 Faculty of Social Sciences and Economics, University of Alzahra, Tehran, Iran



owadays, innovation considered as the most important factor, which can affect economic growth extraordinary. Therefore, investigating the effect of variables affecting innovation has priority. In this study, we try to investigate 1) the natural resource curse hypothesis and 2) the effect of institutional quality on the way in which natural resources affects innovation. To investigate these goals, we choose countries that categorized as the efficiency-driven based on the global competitiveness report (2017) during the period 2011-2016 and use GMM estimator to estimate the model. The results show that while the effect of natural resources on innovation is negative in those countries, which confirms the resource curse hypothesis, but the impact of natural resources interaction with institutional quality is positive. These results emphasizing the importance of institutional quality as a groundwork for the way in which other variables can be effective.


Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies58(2), 277-297.

Arellano, M., & Bover, O. (1995). Another Look at the Instrumental Variable Estimation of Error-Components Models. Journal of Econometrics, 68(1), 29-51.

Auty, R. M. (1994). Industrial Policy Reform in Six Large Newly Industrializing Countries: The Resource Curse Thesis. World Development, 22(1), 11-26.

Baltagi, B. (2008). Econometric Analysis of Panel Data. West Sussex: John Wiley & Sons.

Blundell, R., & Bond, S. (1998). Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics87(1), 115-143.

Bond, S., Hoeffler, A., & Temple, J. (2001). GMM Estimation of Empirical Growth Models (2001-W21). Economics Group, Nuffield College, University of Oxford, Retrieved from

Cockx, L., & Francken, N. (2016). Natural Resources: A Curse on Education Spending? Energy Policy92(C), 394-408.

D’Amore, R., & Iorio, R. (2016). The Relation between Human Capital and Innovation at a Firm Level a Study on a Sample of European Firms. Small Business Economics8(3), 249-258.

Danquah, M., & Amankwah-Amoah, J. (2017). Assessing the Relationships between Human Capital, Innovation and Technology Adoption: Evidence from Sub-Saharan Africa. Technological Forecasting and Social Change122(C), 24-33.

Efthyvoulou, G., & Vahter, P. (2016). Financial Constraints, Innovation Performance and Sectoral Disaggregation. The Manchester School84(2), 125-158.

GII. (2018). Global Innovation Index. Retrieved from

Gorodnichenko, Y., & Schnitzer, M. (2013). Financial Constraints and Innovation: Why Poor Countries do not catch up. Journal of the European Economic Association11(5), 1115-1152.

Gorodnichenko, Y., Svejnar, J., & Terrell, K. (2015). Does Foreign Entry Spur Innovation? National Bureau of Economic Research, 21514, Retrieved from

Guo, J., Zheng, X., & Song, F. (2016). The Resource Curse and Its Transmission Channels: An Empirical Investigation of Chinese Cities’ Panel Data. Emerging Markets Finance and Trade52(6), 1325-1334.

Gylfason, T. (2000). Resources, Agriculture, and Economic Growth in Economies in Transition. Kyklos53(4), 337-361.

Gylfason, T. (2001a). Natural Resources, Education, and Economic Development. European Economic Review45(4-6), 847-859.

Gylfason, T. (2001b). Nature, Power and Growth. Scottish Journal of Political Economy48(5), 558-588.

Gylfason, T. (2008). Development and Growth in Mineral-Rich Countries. CEPR Discussion Paper, DP7031, Retrieved from

Hottenrott, H., & Peters, B. (2012). Innovative Capability and Financing Constraints for Innovation: More Money, More Innovation? Review of Economics and Statistics94(4), 1126-1142.

IMF. (2018). International Monetary Fund. Retrieved from:

Leite, C., & Weidmann, J. (1999). Does Mother Nature Corrupt? Natural Resources, Corruption and Economic Growth. IMF Working Paper, 99/85, Retrieved from

Mortensen, P. S., & Bloch, C. W. (2005). Oslo Manual-guidelines for Collecting and Interpreting Innovation Data: Proposed Guidelines for Collecting and Interpreting Innovation Data. Organization for Economic Cooperation and Development, Retrieved from

Olsson, O. (2000). Knowledge as a Set in Idea Space: An Epistemological View on Growth. Journal of Economic Growth, 5(3), 253-275.

Olsson, O. (2007). Conflict Diamonds. Journal of Development Economics82(2), 267-286.

Papageorgiadis, N., & Sharma, A. (2016). Intellectual Property Rights and Innovation: A Panel Analysis. Economics Letters141(C), 70-72.

Papyrakis, E., & Gerlagh, R. (2005). Natural Resources, Innovation, and Growth. DEGIT Conference Papers (c010_054). Retrieved from Doi: 10.2139/ssrn.609764.

---------- (2004). The Resource Curse Hypothesis and Its Transmission Channels. Journal of Comparative Economics32(1), 181-193.

Rodriguez, F., & Sachs, J. D. (1999). Why do Resource-abundant Economies Grow more slowly? Journal of Economic Growth4(3), 277-303.

Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5), S71-S102.

Roodman, D. (2009). How to do Xtabond2: An Introduction to Difference and System GMM in Stata. Stata Journal9(1), 86-136.

Sachs, J. D., & Warner, A. M. (2001). The Curse of Natural Resources. European Economic Review45(4-6), 827-838.

---------- (1999a). The Big Push, Natural Resource Booms and Growth. Journal of Development Economics59(1), 43-76.

---------- (1999b). Natural Resource Intensity and Economic Growth. In Mayer, J., Chambers, B., Ayisha, F. (Eds.). Development Policies in Natural Resource Economics. Cheltenham: Edward Elgar.

---------- (1997). Fundamental Sources of Long-run Growth. The American Economic Review87(2), 184-188.

---------- (1995). Natural Resource Abundance and Economic Growth. NBER Working Paper, 5398, Retrieved from

Sun, X. (2017). Firm-level Human Capital and Innovation: Evidence from China (Doctoral Dissertation, Georgia Institute of Technology). Retrieved from

Weitzman, M. L. (1998). Recombinant Growth. The Quarterly Journal of Economics, 113(2), 331-360.

Welsch, H., & Eisenack, K. (2002). Energy Costs, Endogenous Innovation, and Long-run Growth. Journal of Economics and Statistics222(4), 490-499.

Welsch, H. (2008). Resource Dependence, Knowledge Creation, and Growth: Revisiting the Natural Resource Curse. Journal of Economic Development33(1), 45-70.

WDI. (2018). World Development Indicators. Retrieved from

WGI. (2018). World Governance Indicators. Retrieved from