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Resource depletion and economic sustainability in Malaysia

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  • VINCENT, JEFFREY R.
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    Abstract

    Countries richly endowed with natural resources have, on average, developed less rapidly than countries that are poor in natural resources. One possible explanation for this phenomenon is that the level of investment in reproducible capital has been insufficient to offset the depletion of natural capital. The empirical significance of this explanation can be investigated by analysing modified measures of net investment and net domestic product. Estimation of these measures involves calculating the economic depreciation of natural resources, a task that has been problematic in previous studies. Malaysia provides an ideal case for such empirical investigations, as it is one of the world's most resource-rich countries yet also has one of the world's fastest-growing economies, consists of three subnational regions that differ significantly in terms of economic structure, and has sufficient data for estimating conceptually correct measures of natural resource depreciation. Results of the analysis indicate that Malaysia has developed sustainably, despite substantial resource depletion. This is not the case in two of the regions, however, where trends in both net investment and net domestic product indicate that current consumption levels cannot be sustained. Nevertheless, the regional differences in sustainability might be consistent with optimal national use of the rents generated by exploitation of the country's natural resources.

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    Bibliographic Info

    Article provided by Cambridge University Press in its journal Environment and Development Economics.

    Volume (Year): 2 (1997)
    Issue (Month): 01 (February)
    Pages: 19-37

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    Handle: RePEc:cup:endeec:v:2:y:1997:i:01:p:19-37_00

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    Cited by:
    1. Harris, Michael & Fraser, Iain, 2001. "Natural Resource Accounting in Theory and Practive: A Critical Assessment," 2002 Conference (46th), February 13-15, 2002, Canberra 125106, Australian Agricultural and Resource Economics Society.
    2. van der Ploeg, Frederick & Poelhekke, Steven, 2010. "The pungent smell of "red herrings": Subsoil assets, rents, volatility and the resource curse," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 44-55, July.
    3. Blignaut, J. N. & Hassan, R. M., 2002. "Assessment of the performance and sustainability of mining sub-soil assets for economic development in South Africa," Ecological Economics, Elsevier, vol. 40(1), pages 89-101, January.
    4. Deacon, Robert & Norman, Catherine S, 2004. "Does the Environmental Kuznets Curve Describe How Individual Countries Behave?," University of California at Santa Barbara, Economics Working Paper Series qt6gm8164w, Department of Economics, UC Santa Barbara.
    5. Mabugu, Ramos E. & Chitiga, Margaret, 2002. "Accounting For Forest Resources In Zimbabwe," Discussion Papers 18021, University of Pretoria, Center for Environmental Economics and Policy in Africa.
    6. Neumayer, Eric, 2004. "Does the "Resource Curse" hold for Growth in Genuine Income as Well?," World Development, Elsevier, vol. 32(10), pages 1627-1640, October.
    7. Pezzey, J.C.V.John C. V., 2004. "One-sided sustainability tests with amenities, and changes in technology, trade and population," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 613-631, July.
    8. Andrés Gómez-Lobo E., 2001. "Sustainable development and natural resource accounting in a small open economy: a methodological clarification," Estudios de Economia, University of Chile, Department of Economics, vol. 28(2 Year 20), pages 203-216, December.
    9. Kumar, Surender, 2008. "Is India on a Sustainable Development Path?," MPRA Paper 10086, University Library of Munich, Germany.
    10. M. del Mar Rubio Varas, 2005. "Value and depreciation of mineral resources over the very long run: An empirical contrast of different methods," Economics Working Papers 867, Department of Economics and Business, Universitat Pompeu Fabra.
    11. Gren, Ing-Marie & Isacs, Lina, 2009. "Ecosystem services and regional development: An application to Sweden," Ecological Economics, Elsevier, vol. 68(10), pages 2549-2559, August.
    12. Othman, Jamal & Jafari, Yaghoob, 2011. "Accounting for Depletion of Oil and Gas Resources in Malaysia," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100690, Australian Agricultural and Resource Economics Society.
    13. Giles Atkinson & Kirk Hamilton, 2007. "Progress along the path: evolving issues in the measurement of genuine saving," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(1), pages 43-61, May.

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