Influence of natural resources, ICT, and financial globalization on economic growth: evidence from G10 countries

Abstract

This paper aims to investigate the influence of natural resources, information and communication technologies (ICT), and financial globalization on the economic growth of G10 economies while controlling the effect of labor and capital. We apply the cross-sectional-autoregressive-distributed lag (CS-ARDL) model on annual data from 1992 to 2020. Initial results confirm the presence of cross-sectional dependence, heterogeneity in the slope coefficients, stationarity properties, and panel cointegration. The long-run and short-run results illustrate that natural resource dependency leads to lower economic growth. This confirms the Dutch disease hypothesis, where the natural resource industry adversely impacts the manufacturing industry and causes a subsequent decline in national income. Financial globalization promotes economic growth, whereas ICT only does it in the long run. These results suggest that digitalization and financial globalization are imperative for sustainable growth.