The Resource–Growth Nexus in ASEAN and South Asia: Spatial Dependence and Regional Heterogeneity

This paper examines the resource–growth nexus in the ASEAN and South Asia regions through a spatial econometric framework. Building on the resource curse–blessing debate, I use annual panel data for fifteen countries spanning from 1996 to 2021. The baseline specification uses a pooled OLS regression with GDP per capita growth as the dependent variable and natural resource rents, foreign direct investment, trade, and population growth as explanatory variables. To capture cross-border interdependencies often overlooked in conventional models, I extend the analysis by using the Spatial Durbin Model (SDM) with a k-nearest neighbour spatial weights matrix (k = 2). This allows identification of both direct domestic effects and indirect spatial spillovers effects. The pooled regression finds a negative impact of natural resource rents on economic growth, consistent with the resource curse hypothesis. The SDM confirms and strengthens this evidence by revealing significant negative spatial spillovers: increases in resource dependence in one country reduce growth both domestically and in neighbouring economies. Overall, across multiple model specifications, the findings provide robust evidence in support of the resource curse hypothesis for the combined ASEAN and South Asia sample. Further, regional heterogeneity is also evident. ASEAN countries exhibit a strong resource curse with negative domestic and cross-border effects, while South Asia shows signs of a resource blessing domestically but without significant spatial spillovers. Population growth exerts consistently negative effects across specifications. The results underscore the importance of managing resources within a spatially interdependent regional context with policy implications for cooperative resource governance, diversification strategies, and demographic management.