Human Capital and Non-Renewable Natural Resources in Latin America and the Caribbean: ‘Is It a Curse or a Blessing’?

Abstract

This study examines the role of non-renewable natural resources in the accumulation of human capital in a sample of eighteen Latin American and Caribbean countries from 1995 to 2018. We assess the influence of non-renewable resources through six distinct variables and employ panel data co-integration techniques (PMG-ARDL). Our findings reveal a positive long-run effect, whether measured by abundance or dependence indicators. Even in cases where negative short-run effects are observed, the positive impact is consistent in the long term. Furthermore, physical capital stock, institution quality, and a more open economy are the most important drivers of human capital accumulation in the region. Although the long-run effect of non-renewable natural resources on human capital was positive, the estimated elasticities account for a relatively low effect. Consequently, even in the absence of the ‘curse’ effect, we do not deem it appropriate to consider these results as a blessing.