*2.2. The Impact of Resource Endowment (RE) on Sustainable Growth (SG)*

Resource endowment (*RE*), also known as factor endowment, relates to a country's ownership of numerous production components such as labor, money, land, technology, and management. The concept of the "resource curse" was coined by Auty (1993), where the dependence on natural resources and its potentially detrimental relationship with economic growth is referred to as a "curse". His research found that the world's natural resource-rich countries were unable to use their environmental wealth to improve their economies, and he introduced the concept of the "resource curse", and as a result, their economies grew at a slower rate than those without natural resources [38]. The evidence that *RE* negatively impacts *SG* remains compelling, especially in Chinese cities that produce fossil energy, and the direct influence of *ERs* on economic development exhibits an "N" curve connection, according to survey data [39]. However, there was some dissent to this widely held belief; Hilmawan and Clark (2019) found no evidence of a "resource curse" using yearly fixed effects and first-order difference regression analysis [40]. It is worth noting that even the most ardent proponents of the "resource curse" are not arguing that states with abundant natural resources would be better off without them [39].

Basic and diverse resources are the two types of enterprise resources [41]. Human resources, financial resources, material resources, technical resources, information resources, and other basic resources are required for company technological innovation operations. The heterogeneity of heterogeneous resources is expressed in the variability of the unique use value [42]. Enterprise culture, which transforms basic resources into diverse resources while encouraging technical innovation abilities, ensures the survival and development of businesses. Energy companies' *RE* is unique, and their financial *RE* mostly consists of government subsidies and financing limits. The value contained in social interactions between individuals or groups is referred to as social capital, which may help spread knowledge, communicate information, and share resources, lower transaction costs, and enhance financial performance. The "relationship finance hypothesis," presented by Chakravarty and Scott (1999), holds that social capital plays a crucial function in enhancing a company's ability to raise funds [43].

Government subsidies are the most visible kind of social capital in the energy sector. The value of the government subsidy is derived from the company's financial statements' remarks. The value of government subsidy items is calculated using the amount from direct subsidies, tax refunds, and other things [44]. The subsidies granted by the government can help companies with customer service shortage of funds and are an important source of cash for companies [45]. Hu (2001) found no evidence of a link between government subsidies and increased productivity in subsidized firms in Chinese industries [46]. According to Yang et al. (2019), government subsidy policies have a positive moderating effect on investment in the renewable energy sector in China [47]. The contribution of government subsidies to renewable energy investment increases significantly when energy consumption

intensity is high, but bank credit is more restrictive, and the degree of economic growth is below the threshold. Both cash subsidies and tax incentives can encourage renewable energy investment, with tax incentives having a greater impact. Overall, government subsidies are the main driver of renewable energy firms.

Another expression of *RE* in energy businesses is a financial limitation. Energy companies face three types of financial constraints: loan financing, equity financing, and internal financing. Short-term liabilities, according to Cutillas and Sánchez (2014), can prevent businesses from making unproductive investments [48]. Enterprises' expansion initiatives are directly hampered by financial restrictions [37]. The most significant impediment to the development of SMEs is the absence of funding channels; high financing costs and lack of professional advice are the main obstacles to external financing [49]. Access to funding is a crucial growth restriction for SMEs, according to Beck and Demirguc-Kunt (2006), and financial and legal institutions play a key role in alleviating this limitation [50]. Ferris et al. (2017) found that social capital lowered the cost of equity borrowing using data from 1999 to 2012 [51]. Information asymmetry and the agency problem are reduced as a result of social relationships, lowering the cost of equity. Hypothesis 2 is offered based on the preceding discussion:

#### **Hypothesis 2 (H2).** *A positive relationship exists between resource endowment and long-term growth.*
