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- Natural Resources, Globalization and Sustainable Economic WelfarePublication . Faria, Samuel da Silva; Fuinhas, José Alberto Serra Ferreira RodriguesGross Domestic Product (GDP) has been the most widely accepted measure of economic performance, but it fails to accurately measure economic development, overlooking key aspects of quality of life and sustainability. Over the last few years, concern about the future of our planet and sustainability of human activity rose among public eye and political institutions, due to the increased natural resources exploitation, and the intensification and deepening of globalization. Thereby, the Index of Sustainable Economic Welfare (ISEW) emerges as the dominant alternative. This paper aims to: (i) compare both GDP and ISEW as measures of economic performance; and (ii) establish the effects of natural resources exploitation, and globalization on both economic growth and sustainable development. The research question is: Are globalization and natural resources exploitation harmful to economic development? Diagnostic tests show presence of cross-section dependence, heteroskedasticity and serial correlation. Thus, Driscoll-Kraay estimator is performed due to its robustness in the presence of these phenomena. A Panel Autoregressive Distributed Lag approach is used, which allows to check for short and long-term effects of the variables. The panel is composed by 14 OECD countries, and uses annual data for the time span from 1995 to 2013. Results show that natural resource rents have a positive effect on GDP per capita in the short-run and a negative effect on ISEW per capita both on short- and long-run. These results reveal that enhancing GDP does not account for the impacts of changes in natural capital and that natural resource exploitation may represent a hazard to sustainable development. Trade openness has a positive impact on short-term economic growth and a negative impact on long-term sustainable development. Other results show that social globalization has a positive impact on long-term economic growth and that political integration is positive for economic welfare. Policy makers ought to consider ISEW as an alternative and more accurate measure of economic development, should implement policies that reduce the depletion of natural resources, and confine the harmful effects of globalization to enhance economic development and create more welfare.
- Natural Resources, Globalization and Sustainable Economic Welfare: A Panel ARDL ApproachPublication . Fuinhas, José Alberto; Marques, António Cardoso; Faria, Samuel da SilvaGDP has been the most widely accepted measure of economic performance but it fails to accurately measure economic development, overlooking key aspects of quality of life and sustainability. Thereby, the Index of Sustainable Economic Welfare (ISEW) emerges as the dominant alternative. This paper aims to (i) compare both GDP and ISEW as measures of economic performance and (ii) establish the effects of natural resource exploitation and globalization on both economic growth and sustainable development. A Panel Autoregressive Distributed Lag approach is used, to check for short and long-term effects. The panel is composed by 14 OECD countries, using annual data for the time span from 1995 to 2013. Results show that natural resources rents have a positive effect on GDP per capita in the short-run and a negative effect on ISEW per capita on both short and long-run. Trade openness has a positive impact on short-run economic growth and negative impact on long-term sustainable development. Policy makers ought to consider ISEW as an alternative and more accurate measure of economic performance, should implement policies that reduce the depletion of natural resources and confine the harmful effects of globalization to enhance economic development and create more welfare.