Do natural resources hinder or help? Exploring economic development in EU countries through human and institutional lenses

This study investigates the impact of natural resource dependence and abundance on economic development in 21 EU countries from 1996 to 2019, focusing on critical gaps in the literature on resource-driven development. Using the Generalized Method of Moments (GMM), we address issues of endogeneity, heterogeneity, and cross-sectional dependence issues to capture nuanced relationships. Findings indicate that natural resource dependence and abundance are negatively associated with development in the EU; economic growth, however, positively reinforces it. Additionally, the observed patterns consistent with the resource curse are associated with lower development outcomes. Considering the impact of natural resources alongside economic growth, human capital, and institutional quality factors, this study provides valuable insights for EU policymakers, highlighting the need for sustainable and inclusive resource management policies. In a broader sense, the findings are robust for resource-rich countries aimed at achieving sustainable development.