Macroeconomic and Political Determinants of Resource Nationalism

Abstract

Resource nationalism is essentially mandatory government intervention in natural resources businesses by political or economic means in order to benefit the nation and the people. It is attacking the mining industry more and more rampantly by all kinds of means since the twenty-first century. Poor countries who count on a resource-led economic growth usually find themselves trapped into “resource curse”. The harmfulness of resource nationalism for investors is that one event can quickly escalate and lead to a chain of events which make projects commercially unavailable. In spite of historical and theoretical social investigations in the causes of resource nationalism, rare studies engaged in quantification of dominant parameters of it. The objective of this study is to find significant factors that dominate the occurrence of resource nationalism for important metal and energy resources producing countries and quantify their marginal effects. The study applies binary choice logit model for panel data using pooled method. One feature of the research is that binary data set of occurrence of resource nationalism are sorted out by authors referencing U.S. Geological Survey’s reports. The results indicate that high-technology export (% manufactured export), ores and metals exports (% merchandise exports), rule of law (world governance indicator), trade (% GDP), and natural resource rent except forest (% GDP ) dominant the occurrence of resource nationalism for high and upper middle income group countries; government effectiveness (world governance indicator), policy perception index (The Fraser Institute), high-technology export (% manufactured export), and mineral rent (% GDP) dominant the occurrence of resource nationalism for lower middle and low income countries. According to our model, probability of occurrence of resource nationalism in 90 countries are predicted. Top 10 risky countries in 2012 are estimated to be North Korea, India, Honduras, Indonesia, Kazakhstan, Burkina Faso, Mongolia, Cuba, Bolivia, and Peru. The study is a primary trial of researching on resource nationalism and provides some insights for theoretical building and simulation on the issue.