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Nature, Power, and Growth

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Author Info
Thorvaldur Gylfason ()

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Abstract

This essay reviews the relationship between natural-resource abundance and economic growth around the world, and presents some new results. The principal reasons why resource-based production can inhibit economic growth over long periods are traced to the Dutch disease, neglect of education, rent seeking, and economic policy failures. Across a large number of countries in the period from 1965 to 1998, the share of the primary sector in the labour force is shown to be inversely related to exports, domestic and foreign investment, and education, and directly related to external debt, import protection, corruption, and income inequality. The cross-sectional data show, moreover, that the share of the primary sector in the labour force is inversely related to per capita growth across countries. None of this lies in the nature of things, however. What seems to matter for economic growth is not the abundance of natural resources per se, but rather the quality of their management, and of economic management and institutions in general.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 413.

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Date of creation: 2001
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Handle: RePEc:ces:ceswps:_413

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Related research
Keywords: Natural resources; rent seeking; economic growth;

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Find related papers by JEL classification:
E00 - Macroeconomics and Monetary Economics - - General - - - General
O00 - Economic Development, Technological Change, and Growth - - General - - - General
Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

References listed on IDEAS
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  1. repec:cup:macdyn:v:3:y:1999:i:2:p:204-25 is not listed on IDEAS
  2. Gylfason, Thorvaldur & Herbertsson, Tryggvi Thor, 1996. "Does Inflation Matter for Growth?," CEPR Discussion Papers 1503, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August. [Downloadable!] (restricted)
  4. Paldam, Martin, 1997. "Dutch disease and rent seeking: The Greenland model," European Journal of Political Economy, Elsevier, vol. 13(3), pages 591-614, September. [Downloadable!] (restricted)
  5. Gylfason, Thorvaldur & Herbertsson, Tryggvi Thor & Zoega, Gylfi, 1997. "A Mixed Blessing: Natural Resources and Economic Growth," CEPR Discussion Papers 1668, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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    Other versions:
  9. Gylfason, Thorvaldur & Zoega, Gylfi, 2001. "Natural Resources and Economic Growth: The Role of Investment," CEPR Discussion Papers 2743, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  10. Aaron Tornell & Philip R. Lane, 1999. "The Voracity Effect," American Economic Review, American Economic Association, vol. 89(1), pages 22-46, March. [Downloadable!] (restricted)
  11. Tornell, Aaron & Lane, Philip R., 1998. "Are windfalls a curse?: A non-representative agent model of the current account," Journal of International Economics, Elsevier, vol. 44(1), pages 83-112, February. [Downloadable!] (restricted)
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  13. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December. [Downloadable!] (restricted)
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  14. Auty, Richard M., 1994. "Industrial policy reform in six large newly industrializing countries: The resource curse thesis," World Development, Elsevier, vol. 22(1), pages 11-26, January. [Downloadable!] (restricted)
  15. Herbertsson, Tryggvi Thor & Skuladottir, Marta & Zoega, Gylfi, 2000. "Three Symptoms And A Cure: A Contribution To The Economics Of The Dutch Disease," CEPR Discussion Papers 2364, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  23. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June. [Downloadable!] (restricted)
  24. Gylfason, Thorvaldur, 2001. "Nature, Power, and Growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(5), pages 558-88, November. [Downloadable!] (restricted)
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  25. Robert E. Hall & Charles I. Jones, 1996. "The Productivity of Nations," NBER Working Papers 5812, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  26. Paldam, Martin & Svendsen, Gert Tinggaard, 2000. "An essay on social capital: looking for the fire behind the smoke," European Journal of Political Economy, Elsevier, vol. 16(2), pages 339-366, June. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Elissaios Papyrakis, 2007. "A Development Curse: Formal vs. Informal Activities in Resource-Dependent Economies," DEGIT Conference Papers c012_027, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
  2. Thorvaldur Gylfason, 2001. "Nature, Power, and Growth," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  3. Thorvaldur Gylfason, 2001. "Resources, Agriculture, and Economic Growth in Economies in Transition," Development and Comp Systems 0012006, EconWPA. [Downloadable!]
    Other versions:
  4. Erling Røed Larsen, 2004. "Escaping the Resource Curse and the Dutch Disease? When and Why Norway Caught up with and Forged ahead of Its Neighbors," Discussion Papers 377, Research Department of Statistics Norway. [Downloadable!]
  5. Pessoa, Argentino, 2008. "Natural resources and institutions: the “natural resources curse” revisited," MPRA Paper 8640, University Library of Munich, Germany. [Downloadable!]
  6. Betty Agnani & Amaia Iza, 2005. "Growth in an oil abundant economy: The case of Venezuela," DEGIT Conference Papers c010_053, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
  7. J. AZNAR-MARQUEZ & J.R. Ruiz-Tamarit, 2002. "Renewable Natural Resources and Endogenous Growth," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002029, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
    Other versions:
  8. Elliot, Vaughn & Hartarska, Valentina & Bailey, Conner, 2008. "Stunted Growth: Natural Resource Concentration, Economic Growth, and Dutch Disease in the Southeastern United States," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6494, Southern Agricultural Economics Association. [Downloadable!]
  9. Elissaios Papyrakis & Reyer Gerlagh, 2005. "Natural Resources, Innovation, and Growth," DEGIT Conference Papers c010_054, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
  10. Bety Agnany & Amaia Iza, 2008. "Growth in an oil abundant economy: The case of Venezuela," ThE Papers 08/18, Department of Economic Theory and Economic History of the University of Granada.. [Downloadable!]
  11. Elissaios Papyrakis, 2004. "Natural Resources, Innovation, and Growth," Working Papers 2004.129, Fondazione Eni Enrico Mattei. [Downloadable!]
  12. Betty Agnani & Amaia Iza, 2005. "Growth in an oil abundant economy: The case of Venezuela," DFAEII Working Papers 200515, University of the Basque Country - Department of Foundations of Economic Analysis II. [Downloadable!]
  13. Argentino Pessoa & Mário Rui Silva, 2009. "Environment Based Innovation: Policy Questions," FEP Working Papers 308, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
  14. You, Jong-Sung & Khagram, Sanjeev, 2004. "Inequality and Corruption," Working Paper Series rwp04-001, Harvard University, John F. Kennedy School of Government. [Downloadable!]
  15. Matteo Cervellati & Piergiuseppe Fortunato, 2004. "Natural resources and the wealth of nations in a globalized world economy," Cahiers de la Maison des Sciences Economiques v04068, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  16. José Ramón Ruiz Tamarit & Manuel Sánchez Moreno, 2006. "Optimal Regulation And Growth In A Natural-Resource-Based Economy," Working Papers. Serie AD 2006-21, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
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This page was last updated on 2009-11-3.

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