Взаимосвязь наличия природных ресурсов и финансового развития в странах G20 / Relationship between resource abundance and financial development in G20 countries
Аннотация
Studying the financial resource curse and the role of natural resources in economic development is highly important in understanding the complex interplay between economic growth, natural resource endowments and financial systems. Natural resources, such as oil, gas, and minerals, can generate significant income for resource-rich countries, but they can also create a range of economic and political challenges in management of possible benefits.
The resource curse, also known as the paradox of plenty, refers to the negative economic and social consequences that can arise from an abundance of natural resources. Adverse impact is evident in slowdown of non-processing sectors and the disproportionately sharp growth of the manufacturing industries. The country is gradually becoming vulnerable to external influences, like macroeconomic shocks, strict trade agreements. At the same time implementation of technologies and corporate responsibility becomes more difficult, because the risk of monopoly power in extraction occurs.
Natural resources can influence the development of financial systems by creating demand for financial services, providing collateral for loans and influencing the behavior of financial institutions. The impact of natural resources on financial development is complex and multifaceted, and it requires an in-depth understanding of the underlying mechanisms.
By understanding the mechanisms and drivers behind the resource curse, policymakers can design effective strategies to mitigate its effects and promote sustainable economic growth, reduce poverty, improve the well-being of citizens.
The purpose of study is to consider the role of natural resources in finance, taking into account channels for mitigating the resource curse. The object of work is the leading economies of G20 countries. The subject of study is the impact of resource endowment on the financial performance of these countries.
The relevance of research is associated with a key role of financial market development for the general position of economy and strong connections between a financial system and intentions of agents, who manage capital, like business or trade partners countries.
Main goals for this research are understanding the possible scenarios of resource rent impact on the financial sector, investigating the influence of natural resource endowment on the depth of monetary market, explore current trends in formation of national and global financial system.
The thesis includes two chapters. The first chapter contains a description of the financial sector as part of economy, its functions and the importance of ensuring capital movement processes. It also considers the factors of development from a political, economic and a technological point of view. The second chapter reveals the features of modern financial market with an emphasis on the functioning of financial systems in G20 economies. Further it develops hypotheses about the effect of resource rents on the development of capital market based on the literature and formulates recommendations for macroeconomic policy.
The econometric analysis is based on data for the years 2002-2021 for the member countries of G20 alliance. The assessments were made in Stata 14 program. The information sources are World Bank, Bank for international settlement, national central banks of the countries. Estimation technique is augmented mean group by Eberhardt and Bond. It is commonly used for conditions of heterogeneous slope coefficients across units and correlation between panels (cross-sectional dependence).
Econometric model is constructed for the variable of financial market depth, measured with credit to GDP ratio. It captures the size of financial market relative to economy output. For the explanatory variables I have chosen natural resource rent, control of corruption index, scientific and engineering articles published, gross national income growth, inflation in consumer price index. Summarily, they promote expansion of financial services and improvement of their quality.
Quantification showed a differential effect of natural rents for the financial sector, while all other factors coincided in the intended effect. On average across countries, the magnitude of processing sector revenues is unrelated to financial depth, while a closer look at interactions with existing institutions lead to possibility of resource curse that is remedied by successful government performance. A grouping of states by resource endowment highlighted the favorable importance of resources for financial market improvement in countries that have not currently achieved large natural resource revenues. Conversely, for countries with relatively large resource rents, subsequent steps to strengthen manufacturing lead to slower economic growth. A separate analysis of countries with a strong record of fighting corruption has shown that the negative impact of substituting natural rents for other potential revenues can be corrected by increased control over their spending.
Scientific activity and successful inflation targeting help to increase the demand for financial services. However, for the Group of Twenty countries during 2002-2021 there is a negative correlation between the growth of national income per capita and the depth of the financial sector. The explanation stems from the fact that almost a large part of the population has access to capital in these countries, and uses credit in times of crisis. In developed countries, a high credit-to-GDP ratio can sometimes be negatively linked to GDP growth. A high credit-to-GDP ratio can be a sign of over-indebtedness, which can lead to financial instability and economic downturns. When households and businesses become heavily indebted, they may be less able to respond to changes in economic conditions, such as a recession or a sudden increase in interest rates. This can lead to a contraction in economic activity and a decline in GDP growth.
The findings lead to several recommendations for governments. The development of science and innovation acts as a channel for strengthening the financial sector in economy, and hence the overall economic progress. The state should use levers to manage resource rents, like reserve funds, fiscal policy for manufacturing, and environmental protection.
The resource curse, also known as the paradox of plenty, refers to the negative economic and social consequences that can arise from an abundance of natural resources. Adverse impact is evident in slowdown of non-processing sectors and the disproportionately sharp growth of the manufacturing industries. The country is gradually becoming vulnerable to external influences, like macroeconomic shocks, strict trade agreements. At the same time implementation of technologies and corporate responsibility becomes more difficult, because the risk of monopoly power in extraction occurs.
Natural resources can influence the development of financial systems by creating demand for financial services, providing collateral for loans and influencing the behavior of financial institutions. The impact of natural resources on financial development is complex and multifaceted, and it requires an in-depth understanding of the underlying mechanisms.
By understanding the mechanisms and drivers behind the resource curse, policymakers can design effective strategies to mitigate its effects and promote sustainable economic growth, reduce poverty, improve the well-being of citizens.
The purpose of study is to consider the role of natural resources in finance, taking into account channels for mitigating the resource curse. The object of work is the leading economies of G20 countries. The subject of study is the impact of resource endowment on the financial performance of these countries.
The relevance of research is associated with a key role of financial market development for the general position of economy and strong connections between a financial system and intentions of agents, who manage capital, like business or trade partners countries.
Main goals for this research are understanding the possible scenarios of resource rent impact on the financial sector, investigating the influence of natural resource endowment on the depth of monetary market, explore current trends in formation of national and global financial system.
The thesis includes two chapters. The first chapter contains a description of the financial sector as part of economy, its functions and the importance of ensuring capital movement processes. It also considers the factors of development from a political, economic and a technological point of view. The second chapter reveals the features of modern financial market with an emphasis on the functioning of financial systems in G20 economies. Further it develops hypotheses about the effect of resource rents on the development of capital market based on the literature and formulates recommendations for macroeconomic policy.
The econometric analysis is based on data for the years 2002-2021 for the member countries of G20 alliance. The assessments were made in Stata 14 program. The information sources are World Bank, Bank for international settlement, national central banks of the countries. Estimation technique is augmented mean group by Eberhardt and Bond. It is commonly used for conditions of heterogeneous slope coefficients across units and correlation between panels (cross-sectional dependence).
Econometric model is constructed for the variable of financial market depth, measured with credit to GDP ratio. It captures the size of financial market relative to economy output. For the explanatory variables I have chosen natural resource rent, control of corruption index, scientific and engineering articles published, gross national income growth, inflation in consumer price index. Summarily, they promote expansion of financial services and improvement of their quality.
Quantification showed a differential effect of natural rents for the financial sector, while all other factors coincided in the intended effect. On average across countries, the magnitude of processing sector revenues is unrelated to financial depth, while a closer look at interactions with existing institutions lead to possibility of resource curse that is remedied by successful government performance. A grouping of states by resource endowment highlighted the favorable importance of resources for financial market improvement in countries that have not currently achieved large natural resource revenues. Conversely, for countries with relatively large resource rents, subsequent steps to strengthen manufacturing lead to slower economic growth. A separate analysis of countries with a strong record of fighting corruption has shown that the negative impact of substituting natural rents for other potential revenues can be corrected by increased control over their spending.
Scientific activity and successful inflation targeting help to increase the demand for financial services. However, for the Group of Twenty countries during 2002-2021 there is a negative correlation between the growth of national income per capita and the depth of the financial sector. The explanation stems from the fact that almost a large part of the population has access to capital in these countries, and uses credit in times of crisis. In developed countries, a high credit-to-GDP ratio can sometimes be negatively linked to GDP growth. A high credit-to-GDP ratio can be a sign of over-indebtedness, which can lead to financial instability and economic downturns. When households and businesses become heavily indebted, they may be less able to respond to changes in economic conditions, such as a recession or a sudden increase in interest rates. This can lead to a contraction in economic activity and a decline in GDP growth.
The findings lead to several recommendations for governments. The development of science and innovation acts as a channel for strengthening the financial sector in economy, and hence the overall economic progress. The state should use levers to manage resource rents, like reserve funds, fiscal policy for manufacturing, and environmental protection.