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Natural Capital and the Resource Curse

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  • Canuto, Otaviano

    ()
    (World Bank)

  • Cavallari, Matheus

    ()
    (World Bank)

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    Abstract

    An abundance of natural resources is intuitively expected to be a blessing. Nonetheless, it has been argued for some decades that large endowments of natural resources—oil, gas, and minerals in particular—may actually become more of a curse, often leading to slow economic growth and redistributive struggles (including armed conflict). Over the years, vast empirical literature has addressed this “paradox.” The literature has had to rely on proxies for natural resource abundance because of the lack of appropriate data, generating doubt on whether results would be similar if direct measures of natural wealth were available. This gap is now starting to be filled with the data series released by the World Bank (1997, 2006, 2011) on natural capital and other forms of countries’ wealth. This note presents an analysis of these data to revisit some of the conclusions reached in the literature on the relationship between natural resource abundance and economic growth. The findings are in alignment with the view that there is no clear deterministic evidence of natural resource abundance as a curse or a blessing; therefore, the effect on a country depends on other determinants.

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    Bibliographic Info

    Article provided by The World Bank in its journal Economic Premise.

    Volume (Year): (2012)
    Issue (Month): 83 (May)
    Pages: 1-6

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    Handle: RePEc:wbk:prmecp:ep83

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    1. Otaviano Canuto, 1995. "Competition and endogenous technological change: an evolutionary model," Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 49(1), pages 21-34, January.
    2. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
    3. Brahmbhatt, Milan & Canuto, Otaviano, 2010. "Natural Resources and Development Strategy after the Crisis," World Bank - Economic Premise, The World Bank, issue 1, pages 1-7, February.
    4. Anthony J. Venables & William Maloney & Ari Kokko & Claudio Bravo Ortega & Daniel Lederman & Roberto Rigobón & José De Gregorio & Jesse Czelusta & Shamila A. Jayasuriya & Magnus Blomström & L. Coli, . "Natural Resources: Neither Curse nor Destiny," IDB Publications 59538, Inter-American Development Bank.
    5. Paul Collier & Benedikt Goderis, 2007. "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," CSAE Working Paper Series 2007-15, Centre for the Study of African Economies, University of Oxford.
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