Natural Resources, Human Capital and Economic Growth: Evidence from Indonesia

Abstract

. Empirical evidence indicates that natural resource abundance contributes significantly to economic growth in natural resource-rich countries. Meanwhile, the literature on economic growth demonstrates that human capital is a significant factor in economic growth. This article examines the relationship between Indonesia's natural resource abundance, human capital, and economic growth. The article examined the impact of natural resource and human capital on economic growth in Indonesian provinces using panel data from 2015 to 2019. The findings indicate that natural resources have a detrimental effect on economic growth. This indicates that Indonesia's natural resource-rich provinces are also suffering from the natural resource curse. Several of natural resource-rich provinces have low human capital and high poverty rates. Local Governments must reduce dependence on natural resources and shift the economy to a more productive and sustainable sectors.