Consequences of natural resource constraint on global growth: evidence from the financial sector

An investigation and evaluation of the risks involved with resource constraints on global growth, with evidence from the finance sector. This is part of the GRO (Global Resource Observatory) project at the GSI, whose main project aim is to investigate how the scarcity of finite resources will impact global social and political fragility in the short term. This particular research focuses on how the scarcity of these finite resources will impact on the financial sector especially through investments, insurance, pension schemes and banking activities. The finance sector under investigation is the UK finance sector, considered to have one of the most globalised economies worldwide. The resources which were analysed were food, oil and energy/gas. The reason for the selection of food, oil and energy/gas prices is the volatility of its prices during the past decades and its high rate of fluctuations in its price in the last decade. A quantitative analysis is carried out using regression analysis of over 11 models with different combinations of resource and finance variables and a Granger causality analysis. Results show that resources only significantly affect the finance sector holding GDP constant, with exceptions where food and gas prices significantly affect bank variables even with the inclusion of GDP. The Granger causality analysis shows a couple of 1 and 3 year unidirectional relationships between some finance variables which could indicate the possibility of systemic risks in the finance sector caused by resource scarcity.