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The implications of natural resource exports for non-resource trade

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  • Harding, Torfinn
  • Venables, Anthony J

Abstract

Foreign exchange windfalls such as those from natural resource revenues change non-resource exports, imports, and the capital account. We study the balance between these responses and, using data on 41 resource exporters for 1970-2006, show that the response to a dollar of resource revenue is, approximately, to decrease non-resource exports by 75 cents and increase imports by 25 cents, implying a negligible effect on foreign saving. The negative per dollar impact on exports is larger for countries which have good institutions and higher income levels. These countries have a higher share of manufacturing in their non-resource exports, and we show that manufactures are more susceptible than other products to being crowded out by resource exports.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9318.

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Date of creation: Jan 2013
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Handle: RePEc:cpr:ceprdp:9318

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Keywords: Dutch disease; exports; imports; natural resources; resource curse; trade;

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Cited by:
  1. Brock Smith, 2014. "Dutch Disease and the Oil and Boom and Bust," OxCarre Working Papers 133, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  2. van der Ploeg, Frederick & Venables, Anthony J., 2013. "Absorbing a windfall of foreign exchange: Dutch disease dynamics," Journal of Development Economics, Elsevier, vol. 103(C), pages 229-243.

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