Natural resource rent and Human Capital Accumulation

In this research, the relationship between total natural resource abundance and indicator of human capital (education and health) has been studied. Estimating a system of multiple linear regression models in 2010 and by using ordinary least squares (OLS) for a cross section of 47 RGI ranked countries, we find significant evidence that natural resource abundance, in most of the cases, crowds-out human capital negatively. The model with three set of the dependent variables identified to have heteroscedasticity, however, has no sign of self-autocorrelation and auto collinearity. Nonetheless, among all models, only one, with a dependent variable of public expenditure (percentage of total health expenditure) showed a positive and strong relationship with resource abundance. This model, moreover, has homoscedasticity and we can say that the error terms have constant variance.