Staff View: Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression

Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression

This paper investigates the impact of natural resources on conflict-capital flows relationship in 54 African economies over the 2010–2019 period. Applying econometric method of data analysis, the empirical estimation hinges on generalized method of moments, unit root tests, Kao cointegration test, c...

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Main Authors:	Snow Sini, Sini, Abdul-Rahim, A.S., Lee Chin, Chin, Said, Rusmawati, Sulaiman, Chindo
Format:	Article
Published:	Elsevier 2022
Online Access:	http://psasir.upm.edu.my/id/eprint/102289/ https://www.sciencedirect.com/science/article/pii/S0301420722002392?via%3Dihub
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spelling	my.upm.eprints.1022892024-05-09T03:17:25Z http://psasir.upm.edu.my/id/eprint/102289/ Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression Snow Sini, Sini Abdul-Rahim, A.S. Lee Chin, Chin Said, Rusmawati Sulaiman, Chindo This paper investigates the impact of natural resources on conflict-capital flows relationship in 54 African economies over the 2010–2019 period. Applying econometric method of data analysis, the empirical estimation hinges on generalized method of moments, unit root tests, Kao cointegration test, cross-sectional dependence test, and quantile regression. The estimated results revealed the following. First, generalized method of moments revealed that conflict persistently decreases capital flow. Second, unit root test for both first-and-second generation affirmed stationarity. Third, Kao cointegration test revealed long-run relationship among the modelled variables. Fourth, tests for cross-sectional dependency revealed the existence of structural break and cross-sectional dependence of countries. Fifth, the quantile regression indicated that conflict decreases capital flows for all parts of the distribution, even when the initial degree of capital flows is at 25th percentile. Furthermore, the interaction term (i.e., interacting conflict with the natural resource) showed that natural resources are the reason for the inflow of capital into the Africa. In other words, conflict decreases capital flow into Africa when the level of natural resource extraction is low and vice versa. As such, there is a need to develop and implement policies aimed at increasing sources of capital inflow into the Africa’s economy, such as domestic capital productivity, while decreasing all forms of conflict that can impede capital inflow. To avoid over-reliance on natural resources, policies should aim at creating a peaceful and conducive environment for foreign direct investment inflows to service sectors such as education, financial institutions and others. Thus, there is need to combat conflict in the continent. Elsevier 2022 Article PeerReviewed Snow Sini, Sini and Abdul-Rahim, A.S. and Lee Chin, Chin and Said, Rusmawati and Sulaiman, Chindo (2022) Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression. Resources Policy, 78. art. no. 102791. pp. 1-9. ISSN 0301-4207 https://www.sciencedirect.com/science/article/pii/S0301420722002392?via%3Dihub 10.1016/j.resourpol.2022.102791
institution	Universiti Putra Malaysia
building	UPM Library
collection	Institutional Repository
continent	Asia
country	Malaysia
content_provider	Universiti Putra Malaysia
content_source	UPM Institutional Repository
url_provider	http://psasir.upm.edu.my/
description	This paper investigates the impact of natural resources on conflict-capital flows relationship in 54 African economies over the 2010–2019 period. Applying econometric method of data analysis, the empirical estimation hinges on generalized method of moments, unit root tests, Kao cointegration test, cross-sectional dependence test, and quantile regression. The estimated results revealed the following. First, generalized method of moments revealed that conflict persistently decreases capital flow. Second, unit root test for both first-and-second generation affirmed stationarity. Third, Kao cointegration test revealed long-run relationship among the modelled variables. Fourth, tests for cross-sectional dependency revealed the existence of structural break and cross-sectional dependence of countries. Fifth, the quantile regression indicated that conflict decreases capital flows for all parts of the distribution, even when the initial degree of capital flows is at 25th percentile. Furthermore, the interaction term (i.e., interacting conflict with the natural resource) showed that natural resources are the reason for the inflow of capital into the Africa. In other words, conflict decreases capital flow into Africa when the level of natural resource extraction is low and vice versa. As such, there is a need to develop and implement policies aimed at increasing sources of capital inflow into the Africa’s economy, such as domestic capital productivity, while decreasing all forms of conflict that can impede capital inflow. To avoid over-reliance on natural resources, policies should aim at creating a peaceful and conducive environment for foreign direct investment inflows to service sectors such as education, financial institutions and others. Thus, there is need to combat conflict in the continent.
format	Article
author	Snow Sini, Sini Abdul-Rahim, A.S. Lee Chin, Chin Said, Rusmawati Sulaiman, Chindo
spellingShingle	Snow Sini, Sini Abdul-Rahim, A.S. Lee Chin, Chin Said, Rusmawati Sulaiman, Chindo Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression
author_facet	Snow Sini, Sini Abdul-Rahim, A.S. Lee Chin, Chin Said, Rusmawati Sulaiman, Chindo
author_sort	Snow Sini, Sini
title	Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression
title_short	Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression
title_full	Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression
title_fullStr	Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression
title_full_unstemmed	Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression
title_sort	natural resources’ impact on capital flow and conflict relationship in africa: a novel insight from gmm and quantile regression
publisher	Elsevier
publishDate	2022
url	http://psasir.upm.edu.my/id/eprint/102289/ https://www.sciencedirect.com/science/article/pii/S0301420722002392?via%3Dihub
_version_	1800093769500983296
score	13.211869

Natural resources’ impact on capital flow and conflict relationship in Africa: a novel insight from GMM and quantile regression

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