Examining the Impact of Natural Resources on Export Performance in Top 10 Resource-Rich Countries

Abstract

This study aims to investigate the effect of natural resources on export performance in a panel dataset for a 16-year period, from 2004 to 2021. The sample consists of 10 leading resource-rich countries and the annual data is gathered from the database of World Bank. In the econometric model for this study, the export performance is inserted as the dependent variable, while total rents of natural resources, inflation, FDI, gross capital formation (GCF) and GDP per capita as independent variables that determine their individual effects on exports. The methodology used in the empirical analysis is the Random-Effects Model which was decided by Hausman Test. According to the results, all determinants were found to be highly statistically significant. Specifically, when total natural resources rents increase by 1 percentage point, it is predicted that exports increase by 1.6%. Moreover, when CPI rises by 1 percentage point, export performance is decreased by 1.4%. Next, an increase of 1 percentage point in FDI is linked to an increase in exports by 4.8%. Lastly, if GDP per capita and GCF rise by 1%, export performance will increase by 0.08% and 0.8%, respectively. While our findings resonate with the literature review, one key limitation is the exclusion of the year 2022, 2023 and 2024, due to missing data for rents of natural resources. Government organizations and policymakers which are responsible for implementing trade policies might benefit from this study on export performance.