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The pattern of specialization and economic growth: The resource curse hypothesis revisited

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  • Murshed, Syed Mansoob
  • Serino, Leandro Antonio
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    Abstract

    This paper explores the relation between countries' pattern of trade specialization and long-term economic growth. It shows that countries specializing in the export of natural resource based products only fail to grow if they do not succeed in diversifying their economies and export structure. This conclusion follows from an empirical investigation that has three innovative features. First, it uses a dynamic panel data analysis. Secondly, it employs disaggregated trade data sets to elaborate different measures of trade specialization that distinguish between unprocessed and manufactured natural resource products and are informative about the countries' trade diversification experience, their link to world demand trends and involvement in intra-industry trade. The final innovative aspect of the paper relates to our empirical findings: it is only specialization in unprocessed natural resource products that slows down economic growth, as it impedes the emergence of more dynamic patterns of trade specialization.

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    Bibliographic Info

    Article provided by Elsevier in its journal Structural Change and Economic Dynamics.

    Volume (Year): 22 (2011)
    Issue (Month): 2 (June)
    Pages: 151-161

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    Handle: RePEc:eee:streco:v:22:y:2011:i:2:p:151-161

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    Web page: http://www.elsevier.com/locate/inca/525148

    Related research

    Keywords: Economic growth Resource curse Pattern of trade specialization Productive diversification;

    References

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    1. Bond, Stephen Roy & Hoeffler, Anke & Temple, Jonathan, 2001. "GMM Estimation of Empirical Growth Models," CEPR Discussion Papers 3048, C.E.P.R. Discussion Papers.
    2. Papyrakis, E. & Gerlagh, R., 2004. "The resource curse hypothesis and its transmission channels," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3764006, Tilburg University.
    3. Stijns, Jean-Philippe C., 2001. "Natural Resource Abundance and Human Capital Accumulation," Conference Papers 25128, University of California, Berkeley, Department of Agricultural and Resource Economics.
    4. van der Ploeg, Frederick, 2006. "Challenges and Opportunities for Resource Rich Economies," CEPR Discussion Papers 5688, C.E.P.R. Discussion Papers.
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    7. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
    8. Thorvaldur Gylfason & Gylfi Zoega, 2004. "Natural Resources and Economic Growth: The Role of Investment," DEGIT Conference Papers c009_011, DEGIT, Dynamics, Economic Growth, and International Trade.
    9. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
    10. Pierre Villa & Frédéric Busson, 1997. "Croissance et spécialisation," Revue Économique, Programme National Persée, vol. 48(6), pages 1457-1483.
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    12. van Wijnbergen, Sweder J G, 1984. "The 'Dutch Disease': A Disease after All?," Economic Journal, Royal Economic Society, vol. 94(373), pages 41-55, March.
    13. Serino, L.A., 2007. "Competitive diversification in resource abundant countries: Argentina after the collapse of the convertibility regime," ISS Working Papers - General Series 18753, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    14. Murshed, S. Mansoob, 2004. "When Does Natural Resource Abundance Lead to a Resource Curse?," Discussion Papers 24137, International Institute for Environment and Development, Environmental Economics Programme.
    15. Dalum, Bent & Laursen, Keld & Verspagen, Bart, 1999. "Does Specialization Matter for Growth?," Industrial and Corporate Change, Oxford University Press, vol. 8(2), pages 267-88, June.
    16. Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
    17. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    18. Durlauf,S.N. & Johnson,P.A. & Temple,J.R.W., 2004. "Growth econometrics," Working papers 18, Wisconsin Madison - Social Systems.
      • Durlauf, Steven N. & Johnson, Paul A. & Temple, Jonathan R.W., 2005. "Growth Econometrics," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 8, pages 555-677 Elsevier.
    19. repec:fth:stanho:e-92-3 is not listed on IDEAS
    20. Serino, L.A., 2008. "An investigation of the competitiveness hypothesis of the resource curse," ISS Working Papers - General Series 455, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    21. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
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    Citations

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    Cited by:
    1. MASWANA, Jean-Claude & FAROOKI, Masuma, 2013. "African Economic Growth Prospects: A Resource Curse Perspective," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(2), pages 169-182.
    2. Arazmuradov, Annageldy & Martini, Gianmaria & Scotti, Davide, 2014. "Determinants of total factor productivity in former Soviet Union economies: A stochastic frontier approach," Economic Systems, Elsevier, vol. 38(1), pages 115-135.

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