Quantile on Quantile Analysis of Natural resources-growth and geopolitical risk trilemma

• Published in: Resources policy Vol. 85; p. 103935
• Main Authors: Kong, Yan, Dong, Chuntong, Zhang, Yingyu
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.08.2023
• Subjects: China; Economic growth; Geopolitical risk; Natural resources; Quantile-on-Quantile; Natural resources; Quantile-on-Quantile; Geopolitical risk; Economic growth; China
• ISSN: 0301-4207; 1873-7641
• DOI: 10.1016/j.resourpol.2023.103935

The prevailing literature delivers contradictory evidence vis-à-vis the empirical association between economic growth and natural resources and geopolitical risk. Regarding, the current study re-evaluate the nexus between these variables in China throughout 1985M1-2022M4. Using the Bayer-Hanck combined cointegration test, the variables are found cointegrated. Due asymmetrical data distribution, this study employed the novel Quantile-on-Quantile regression and explores the optimistic impact of natural resources on economic growth. Hence, this study validates the resource-growth assumption in the country. On the other hand, the predicted results asserted that geopolitical risk has a mixed influence on economic growth. The positive and negative impacts are evident in medium and “lower and upper” quantiles, respectively. Further, this research acknowledged the two-way causal association between the study variables. Based on the empirics, this research recommends the sustainable extraction and use of natural resources and the stability of political and economic risks in the country. •Resource-growth nexus is examined in China during 1985M1-2022M4.•The role of geopolitical risk is also considered in the empirical analysis.•Quantile-on-Quantile regression is used due to non-normality distribution of data.•Natural resources positively and significantly affects economic growth.•Geopolitical risk have a mixed impact on the economic growth of the country.