How does natural resource dependence affect public education spending?

Abstract

The “resource curse” phenomenon has been the subject of extensive research, with its causes and transmission mechanisms primarily examined from the perspectives of economic development and rent seeking. Education is a major factor contributing to economically sustainable development, owing to its potential for improving cognition and skill levels and thereby enhancing worker productivity. The crowding-out or crowding-in effect of natural resource dependence on public education spending has been identified as one of the key mechanisms of the resource curse or blessing. Using panel data from 31 Chinese provinces, this empirical study revealed a positive correlation between natural resource dependence and public education expenditure, demonstrating the impact of the crowding-in effect, exerted by natural resource dependence, on public education expenditure. Abundant natural resources can provide funds for education expenditure. The sample was further divided into eastern and central and western regions. The results indicate that the crowding-out effect of natural resource dependence only affects public education expenditure in the Eastern region, while the crowding-in effect of natural resource dependence on public education expenditure in the central and western regions. Research shows that the regional differences of crowding-out or crowding-in effect are very obvious, so the government should adopt transfer payment to promote balanced regional development. Better economic and social policies will help to translate wealth from natural resources into economic growth. Thus, a “resource blessing” may emerge to replace the “resource curse.” Fairly distributed and higher quality education will enhance human capital, thereby promoting economic growth from its current resource-driven pattern to a knowledge-driven pattern.

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Notes

  1. 1.

    This is counterintuitive: generally, the East is better developed. Eastern provinces should pay greater attention to, and invest more in, education. We propose two possible explanations for this counterintuitive phenomenon: first, GDP is higher in the East. As a result, the ratio of education investment to GDP is not high enough. However, it does not necessarily follow that the absolute value of education investment is low. Second, in recent years, China has adopted development strategies such as “The Grand Western Development Program“ and “The Rise of Central China.” These policies are aimed at enhancing public transfer to Central and Western regions, leading to increased investment in education in these regions.

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Acknowledgements

The authors appreciate the valuable comments of the anonymous referees. The English in this document has been checked by at least two professional editors, both native speakers of English.

Funding

The authors are grateful for the financial support provided by the National Natural Science Foundation of China (Nos. 71810107001, 71774071, 71690241, 71573121, 71473233), the China Postdoctoral Science Foundation (No. 2016M601568), the Soft Science Project in Zhenjiang (YJ2018004), the Young Academic Leader Project of Jiangsu University (No. 5521380003), and the Education Science Research Project of Shanxi (GH-16082).

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Correspondence to Hua-ping Sun.

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Highlights

1. The crowding-in effect of natural resource dependence on public education expenditure behavior has been identified.

2. The crowding-in effect of natural resource dependence only affects public education expenditure behavior in the central and western regions.

3. It is recommended that areas rich in natural resources increase investment in public education.

Responsible editor: Philippe Garrigues

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Sun, H., Sun, W., Geng, Y. et al. How does natural resource dependence affect public education spending?. Environ Sci Pollut Res 26, 3666–3674 (2019). https://doi.org/10.1007/s11356-018-3853-6

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Keywords

  • Natural resource dependence
  • Public education spending
  • Resource curse
  • Crowding-in effect