An empirical investigation of resource curse hypothesis for cobalt

Abstract

Natural resources are considered as one of the most important factors stimulating the economic growth and development of countries. The studies concerning the relationship between the abundance of resources and economic growth, namely the resource curse, are increasing day by day and have produced conflicting results, either accepting, rejecting, or partially accepting the existence of the curse. Since the last decade, cobalt chemicals demand has radically increased because of the usage of Li-ion batteries in consumer electronics and electric vehicles. Due to the increasing importance of cobalt as a resource, this study takes an attempt to explore the resource curse hypothesis for cobalt for Australia, Canada, the Democratic Republic of Congo, Cuba, Morocco, Russia, and South Africa over the period of 2000-2018. The study employs second-generation panel data techniques in order to account for the dependency in the cross-sectional units and parameter heterogeneity. The findings of the study show that while the Democratic Republic of Congo exhibits evidence of the resource curse hypothesis for cobalt resource abundance, Canada, Cuba, and Russia reveal a positive relationship between economic growth and cobalt resource availability. For the whole panel, this study fails to find any evidence of the resource curse hypothesis in terms of Cobalt. Based on the findings, several policy implications are provided.