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<p>This study aims to examine the threshold effect of geopolitical risk in the nexus between resource rents and the informal economy. Drawing on data from BRICS member countries over the period 1990–2020, it employs the newly proposed dynamic panel threshold method to disclose an in-depth analysis by looking at the possible regime shift in the relationship between the two variables due to geopolitical risk factors. Empirical results suggest that natural resource rents are found to promote participation in the informal economy in BRICS nations, especially under the high-geopolitical risk regime. These results re-emphasize the importance of natural resources in the expansion of the informal economy. This advocates a strong variety of measures to encourage adherence to the formal economy and promote further formalization of the informal economy as a strategic process to strengthen inclusive growth and build up an attractive labor market. This requires, among others, engaging in regular and multilateral surveillance of the natural resource sector.</p>

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Geopolitical risk threshold in the informal economy-natural resources nexus: evidence from BRICS economies

  • 期刊论文

  • 发表日期：

    2025年5月5日

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  • Maamar Sebri,
  • Folorunsho M. Ajide,
  • Hajer Dachraoui

摘要

This study aims to examine the threshold effect of geopolitical risk in the nexus between resource rents and the informal economy. Drawing on data from BRICS member countries over the period 1990–2020, it employs the newly proposed dynamic panel threshold method to disclose an in-depth analysis by looking at the possible regime shift in the relationship between the two variables due to geopolitical risk factors. Empirical results suggest that natural resource rents are found to promote participation in the informal economy in BRICS nations, especially under the high-geopolitical risk regime. These results re-emphasize the importance of natural resources in the expansion of the informal economy. This advocates a strong variety of measures to encourage adherence to the formal economy and promote further formalization of the informal economy as a strategic process to strengthen inclusive growth and build up an attractive labor market. This requires, among others, engaging in regular and multilateral surveillance of the natural resource sector.