Nexuses Between Rent of Natural Resources, Economic Complexity, and Technological Innovation

Abstract

One way to achieve sustainable development is by generating and registering inventions that facilitate the creation of new products and processes. However, there is concern that excessive reliance on natural resource rent leads to a low rate of technological innovation. This research aims to examine the nexus between natural resource rent, technological innovation, and economic complexity using panel data techniques. Output, the human capital index, and civil liberties moderate the relationship between the variables. Based on the volatility of natural resource income, we use cointegration techniques with structural breaks in the series. Contrary to what was expected, we found that dependence on natural resources is not a limitation for developing technological innovation processes in countries. The cointegration tests, including structural breaks, show a long-run relationship between the five series. Policymakers should use the income from the exploitation of natural resources to encourage technological innovation and diversify the economy, and with this, promote sustainable development.