Document Type : ORIGINAL ARTICLE
Author
Associate professor of financial and energy economics at university of Mazandaran
Abstract
Green investment, as a key instrument for achieving economic growth, sustainable development, and combating climate change, faces unique challenges in resource-dependent economies. This study examines the impact of financial development on green investment, with a specific focus on the moderating role of natural resource abundance, using data from 133 resource-rich developing countries over the period 1990–2021. Nonlinear relationships and threshold effects were analyzed using the Panel Smooth Transition Regression (PSTR) model. The results reveal a two-regime structure in the relationship between financial development and green investment, with the estimated threshold for natural resource rents at approximately 3.22% of GDP. In the first regime (low resource rents), financial development, resource rents, institutional quality, human capital, GDP, and foreign direct investment all exhibit positive and significant effects on green investment. In contrast, in the second regime (high resource rents), the effects of financial development and resource rents weaken and even turn negative, consistent with the resource curse hypothesis. However, institutional quality, human capital, and foreign direct investment demonstrate stronger positive effects in this regime, indicating their capacity to mitigate some of the adverse consequences of resource abundance. The findings suggest that a successful transition to a low-carbon economy in resource-dependent countries requires combining financial development with institutional strengthening, economic diversification, human capital enhancement, and effective attraction of foreign direct investment.
Keywords
- Natural resource abundance (resource curse)
- financial development
- green investment
- PSTR model
- natural resource-rich developing countries
Main Subjects
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