Revisiting Chinese resource curse hypothesis based on spatial spillover effect: A fresh evidence

Abstract

This paper aims to revisit Chinese resource curse hypothesis in the recent era of globalization. The study used provincial panel data of China ranging from year 2005-2018. Spatial regression partial differential method has been employed to test the resource curse hypothesis to reveal the relationship between China's economic growth and natural resources with new features in recent era of globalization. Empirical findings show that there is significant spatial dependence and spatial heterogeneity in China's provincial economic growth under the spatial correlation model; the intra-regional spillover effect, regional spillover effect and total spatial spillover effect of natural resources on economic growth are significantly negative. Similarly, it confirms the existence of resource curse hypothesis. Moreover, the total effect, indirect effect and direct effect of material capital investment and technological innovation on economic growth are positive. It means that the regional economy will grow due to technological innovation and physical capital investment. Correspondingly, this growth will radiate to the surrounding areas. However, the decomposition effect of the labor supply situation on economic growth is negative. So, it can be pointed out that the regional economic growth rate will slow down due to the expansion of the labor force population. But, the overall effect of human capital investment is positive, which means it can significantly promote economic growth. Although, the direct effect of opening to the outside world on economic growth is negative, but its overall effect on economic growth is positive which shows whether opening to the outside world can stimulate the economy varies from different places.