Natural Resources, Human Capital, and Economic Growth: Evidence from Indonesia
Dewi Rahayu

Department Economics and Development Studies, Faculty of Economics and Business, Lambung Mangkurat University, Banjarmasin, Indonesia

Abstract

Empirical studies show that natural resources abundance has an important role in economic growth in natural resources rich countries. Meanwhile, the growth literature shows that human capital is an effective factor in economic growth. This paper investigates the relationship between natural resource abundance, human capital and economic growth in Indonesia. The paper first, investigated the relationships between related variables by cross section method and then the proposed model is tested by panel data for the period 2015 - 2019. The results show that natural resources have a negative relationship to economic growth. This indicates that the natural resource curse is also experienced by natural resource-rich provinces in Indonesia. Several of natural resource-rich provinces have low human capital and high poverty rates. Local Governments must reduce dependence on natural resources and shift the economy to a more productive and sustainable sectors.

Keywords: Natural Resources, Human Capital, Economic Growth

Topic: Economics