The Interactive Influence of Institutional Quality and Resource Dependence on Regional Economic Growth: Evidence from China’s Resource-Based Provinces
Abstract
:1. Introduction
2. Literature Review
2.1. Overview of the Relation between Resource Dependence and Economic Growth
- (1)
- Impact of the Economic Structure: Abundant natural resources make the economy dependent on a single industry, which quickly leads to a single economic structure. When resources are exhausted, the economy is troubled. When a country is too dependent on a specific resource, it usually obtains economic growth through the export trade of a single primary product, which produces a “crowding out effect” on other industries. This concentrates resources such as labor, capital, and technology in resource-based industries, which results in the weakening of sectors such as agriculture and manufacturing, which creates difficulties for future economic restructuring. Suppose that a country’s economic industry is focused on a few resource fields, such as oil and minerals. In this case, point-source economies are more prone to nonproductive activities, such as rent-seeking, and a resource curse (RC) is more likely to occur [13,14];
- (2)
- Impact on Political and Economic Stability: RD is prone to rent-seeking and corrupt behaviors, which thus affect the long-term driving factors of economic development, and escalate the unstable factors of the country’s political economy, which will hinder the stability of the country’s economy, which results in an RC [15,16];
- (3)
- Impact on Regional Sustainable Development: The excessive reliance on natural resources will inevitably damage the ecological environment as the development and utilization of resources increases. Former resource-based cities, such as Pittsburgh in the United States and the Ruhr Industrial Zone in Germany, encounter ecological and environmental problems; Pittsburgh’s transformation was successful, but the Ruhr Industrial Zone was in trouble. The realization of industrial transformation through technological innovation (TI) is very important to the transformation of the economic-growth modes of resource-based regions. Therefore, this paper adds TI as an intermediary variable to test the economic-promotion effect of RD [17].
2.2. Overview of the Relation between Institutional Quality and Economic Growth
- (1)
- IQ affects labor-income distribution and economic development. Roderick et al. assessed the effects of IQ, trade, and geographic conditions on the global income inequality by using three datasets for empirical evidence, and they conclude that the IQ is the most critical factor that affects the income inequality between countries. Both economic and political systems significantly affect economic development. The economic system formulates an incentive mechanism for economic participants, and the political system can have an impact on the quality of the economic system, which thereby affects economic growth. Rent-seeking behavior that is caused by the IQ has become an important reason for the backwardness of regions. The flow of talent to the rent-seeking sector is considered the reason for the stagnation of economic development in Latin America, and for the slow economic growth in Europe. Eastern countries, such as India, are developing historically, and some elites regard rent-seeking as the primary form of economic activity [18];
- (2)
- IQ affects national political stability and economic growth. Ndaba studied the impact of national political power and the rule of law on economic growth, and they point out that a sound democratic political system can curb government corruption, improve the efficiency of public management, and improve a country’s competitiveness [19]. An empirical study of 71 countries found a significant positive correlation between “political instability” and the social income gap, and a significant negative correlation between the lack of property-rights protection and investment, and that economic growth is a national risk indicator for social stability [20];
- (3)
- IQ affects the business performances of entrepreneurs and, ultimately, economic growth. A good system is conducive to entrepreneurial knowledge accumulation, information collection, and opportunity selection. In terms of distinguishing the types of entrepreneurial activities from the IQ, good institutions promote more productive entrepreneurial activities. Productive entrepreneurial activity is the key to economic growth, and the direction of the entrepreneurial talent allocation depends on the relative rewards that social institutions pay to productive or nonproductive fields [19,21,22].
3. Theoretical Analysis and Theoretical Hypothesis
4. Research Design
4.1. Variable Definition and Data Source
4.1.1. Dependent Variable
4.1.2. Explanatory Variables
- (1)
- (2)
- Diversification of property rights: He and Jiang [45] uses the percentage of the number of workers in urban state-owned units to the number of urban employed to measure the diversification of property rights. The “property protection system index” in this paper measures the degree of the property-rights protection in various regions and proposes that the institutional-competitiveness index includes five subitems: a property-rights-protection system, individual economic-decisionmaking freedom, market development, government approval, and the management index and legal-system integrity. By referring to He and Jiang [45]’s practice, this study uses the percentage of the number of workers in urban state-owned units to the number of urban ones. The higher the proportion, the higher the extent of nationalization.
4.1.3. Control Variable
4.1.4. Mediating Variables
4.2. Empirical Model
5. Results and Discussion
5.1. Summary Analysis
5.2. Basic Regression
5.3. Interactive-Term Test
5.4. Mediating-Effect Test
5.5. Robustness Test
6. Conclusions
- (1)
- There is a negative correlation between the RD and regional economic development:
- (2)
- IQ, TI, etc., can weaken the negative impact of the RD on economic growth:
- (3)
- TI is crucial for resource-dependent regions to achieve high-quality economic development:
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Types | Names | Symbols | Definition |
---|---|---|---|
Explained Variable | Regional economic growth | Pergdp | Annual real GDP per capita and taken as a logarithm |
Explanatory Variables | Natural-resource dependence | Res | Extractive industry employment/Total urban employment |
Institutional quality (degree of market-resource allocation, degree of nationalization) | Inst | (1) Regional fiscal expenditure/Regional GDP; (2) The number of employees in state-owned units/ Total number of employees | |
Mediating Variable | Technological innovation | Tech | Total number of annual patent applications |
Control Variables | Industrial structure | Indu | Output of the tertiary industry/GDP |
Human capital | Hum | Number of students in colleges/ Total population | |
Foreign investment | Inv | Foreign investment/Regional GDP | |
R&D investment | R&D | Proportion of R&D expenditure in local financial expenditure | |
Urbanization level | Urb | Urban population/ Total population |
Variables | N | Mean | Min | Max |
---|---|---|---|---|
code | 380 | 10 | 1 | 19 |
year | 380 | 2010 | 2000 | 2019 |
ln_Res | 380 | 0.0120 | 0.00827 | 0.0608 |
ln_Inst | 380 | 7.749 | 0.0638 | 641.1 |
ln_Indu | 380 | 0.398 | 0.286 | 0.571 |
ln_Hum | 380 | 0.0145 | 0.00224 | 0.0292 |
ln_Inv | 380 | 0.153 | 0.0348 | 0.605 |
ln_R&D | 380 | 0.0672 | 0.0492 | 0.287 |
ln_Urb | 380 | 0.460 | 0.232 | 0.706 |
ln_Y | 380 | 9.974 | 7.887 | 11.72 |
ln_Tech | 380 | 9.438 | 5.832 | 13.31 |
(1) | (2) | (3) | (4) | (5) | |
---|---|---|---|---|---|
ln_Res | 12.7385 ** | 4.2574 * | 4.6624 ** | 4.9055 ** | −1.3535 |
(−2.06) | (−1.85) | (−2.04) | (−2.16) | (−0.71) | |
ln_Inst | −0.0020 *** | −0.0002 | −0.0003 | −0.0002 | −0.0002 |
(−3.89) | (−1.23) | (−1.54) | (−0.85) | (−1.39) | |
ln_Indu | 8.6935 *** | 1.3590 *** | 1.6701 *** | 1.5195 *** | 0.2173 |
(−15.8) | (−5.3) | (−6.06) | (−5.41) | (−0.87) | |
ln_Hum | 130.1340 *** | 127.5213 *** | 127.2041 *** | 73.7887 *** | |
(−47.34) | (−44.5) | (−44.64) | (−16.02) | ||
ln_Inv | −0.5597 *** | −0.6385 *** | −0.9908 *** | ||
(−2.90) | (−3.28) | (−6.17) | |||
ln_R&D | 1.1376 ** | −0.2492 | |||
(−2.41) | (−0.63) | ||||
ln_Urb | 4.6868 *** | ||||
(−13.43) | |||||
Constant | 6.3736 *** | 7.4998 *** | 7.4951 *** | 7.4914 *** | 6.8494 *** |
(−25.93) | (−79.53) | (−80.29) | (−80.78) | (−76.58) | |
Obs | 380 | 380 | 380 | 380 | 380 |
Number of code | 19 | 19 | 19 | 19 | 19 |
R-squared | 0.431 | 0.922 | 0.924 | 0.925 | 0.950 |
F | 90.4 | 1052.38 | 861.1 | 728.2 | 965.3 |
(1) | (2) | (3) | |
---|---|---|---|
ln_Res | −1.3535 | −1.576 | −1.6166 |
(−0.71) | (−0.87) | (−0.89) | |
ln_Inst | −0.0002 | −0.0003 * | −0.0008 |
(−1.39) | (−1.88) | (−0.89) | |
ln_Tech | 0.1709 *** | 0.1701 *** | |
(−6.43) | (−6.38) | ||
ln_ResInst | 0.1293 | ||
(−0.56) | |||
ln_Indu | 0.2173 | −0.1009 | −0.1049 |
(−0.87) | (−0.42) | (−0.44) | |
ln_Hum | 73.7887 *** | 57.8155 *** | 58.0052 *** |
(−16.02) | (−11.52) | (−11.52) | |
ln_Inv | −0.9908 *** | −0.9989 *** | −0.9957 *** |
(−6.17) | (−6.56) | (−6.53) | |
ln_R&D | −0.2492 | −0.419 | −0.4133 |
(−0.63) | (−1.11) | (−1.09) | |
ln_Urb | 4.6868 *** | 3.4164 *** | 3.4216 *** |
(−13.43) | (−8.87) | (−8.87) | |
Constant | 6.8494 *** | 6.1943 *** | 6.1983 *** |
(−76.58) | (−46.77) | (−46.68) | |
Obs | 380 | 380 | 380 |
Number of code | 19 | 19 | 19 |
(1) | (2) | (3) | |
---|---|---|---|
Variables | ln_Y | ln_Y | ln_Y |
L.ln_Y | 1.1165 *** | 1.1220 *** | 1.0686 *** |
(−22.84) | (−22.19) | (−16.38) | |
L2.ln_Y | −0.1948 *** | −0.1894 *** | −0.1899 *** |
(−7.72) | (−7.16) | (−7.19) | |
ln_Indu | −0.4853 *** | −0.4857 *** | −0.7256 *** |
(−4.18) | (−4.08) | (−3.15) | |
ln_Hum | 5.6708 ** | 6.3640 * | 14.3711 * |
(−2.22) | (−1.67) | (−1.90) | |
ln_Inv | −0.091 | −0.0868 | −0.0678 |
(−1.52) | (−1.20) | (−0.92) | |
ln_R&D | 0.051 | 0.1203 | 0.1636 * |
(−0.67) | (−1.57) | (−1.93) | |
ln_Urb | 0.2484 | 0.2354 | 0.734 |
(−0.56) | (−0.46) | (−1.13) | |
ln_Res | −1.9201 | −1.7827 | −0.9568 |
(−0.31) | (−0.36) | (−0.88) | |
ln_Inst | 0.00224 | 0.00217 | −0.0025 |
(−0.33) | (−0.24) | (−0.95) | |
ln_Tech | −0.0098 | −0.0216 | |
(−0.61) | (−1.15) | ||
ln_ResInst | 0.8492 | ||
(−0.97) | |||
Constant | 0.8887 *** | 0.8669 *** | 1.2675 *** |
(−3.75) | (−3.51) | (−3.13) | |
Observations | 380 | 380 | 380 |
Number of code | 19 | 19 | 19 |
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Ma, J.; Ahn, Y.-G.; Lee, M.-K. The Interactive Influence of Institutional Quality and Resource Dependence on Regional Economic Growth: Evidence from China’s Resource-Based Provinces. Sustainability 2022, 14, 6173. https://doi.org/10.3390/su14106173
Ma J, Ahn Y-G, Lee M-K. The Interactive Influence of Institutional Quality and Resource Dependence on Regional Economic Growth: Evidence from China’s Resource-Based Provinces. Sustainability. 2022; 14(10):6173. https://doi.org/10.3390/su14106173
Chicago/Turabian StyleMa, Jing, Young-Gyun Ahn, and Min-Kyu Lee. 2022. "The Interactive Influence of Institutional Quality and Resource Dependence on Regional Economic Growth: Evidence from China’s Resource-Based Provinces" Sustainability 14, no. 10: 6173. https://doi.org/10.3390/su14106173