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Discovery of natural resources: A class of general equilibrium models

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  • Vaz, Paulo Henrique

Abstract

When is the discovery of natural resources a curse for a country's industrialization and when is it a blessing? A large literature on economic development has collected evidence on both directions. This paper discusses a class of general equilibrium models that deals with natural resource discoveries and evaluates its potential to accommodate both successful and unsuccessful resource-based industrialization experiences, under different model settings. Particularly, it analyzes the importance of disentangling price and quantity effects. It illustrates that in closed model economies (or large open economies), with vertical integration between manufacturing and energy sectors, the long-run effect on the production of manufacturing goods will depend mainly on the equilibrium price of the natural resource good. Moreover, the strength of the vertical integration, even for small open economies, determines the limits to accommodate blessing or curse type of theories.

Suggested Citation

  • Vaz, Paulo Henrique, 2017. "Discovery of natural resources: A class of general equilibrium models," Energy Economics, Elsevier, vol. 61(C), pages 174-178.
    • Handle: RePEc:eee:eneeco:v:61:y:2017:i:c:p:174-178
    DOI: 10.1016/j.eneco.2016.11.005
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    References listed on IDEAS

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    Cited by:

    1. Roberto Iacono, 2018. "The Dutch disease revisited: absorption constraint and learning by doing," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 17(1), pages 61-85, March.
    2. Cheng, Zhonghua & Li, Lianshui & Liu, Jun, 2020. "Natural resource abundance, resource industry dependence and economic green growth in China," Resources Policy, Elsevier, vol. 68(C).
    3. Lee, Chien-Chiang & He, Zhi-Wen, 2022. "Natural resources and green economic growth: An analysis based on heterogeneous growth paths," Resources Policy, Elsevier, vol. 79(C).
    4. Chala Amante Abate & Dagim Tadesse Bekele & Belisty Bekalu Ayenew & Adisu Abebaw Degu, 2023. "The Relationship Between Natural Resource Rent and Economic Growth in Nigeria," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 13(4), pages 3-25.
    5. Canh, Nguyen Phuc & Schinckus, Christophe & Thanh, Su Dinh, 2020. "The natural resources rents: Is economic complexity a solution for resource curse?," Resources Policy, Elsevier, vol. 69(C).

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    More about this item

    Keywords

    Natural resource discovery; Analytical general equilibrium model;

    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • Q37 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Issues in International Trade
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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