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Natural Resources, Innovation, and Growth

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  • Elissaios Papyrakis
  • Reyer Gerlagh

Abstract

This paper investigates the connection between resource abundance and innovation, as a transmission mechanism that can elucidate part of the resource curse hypothesis; i.e. the observed negative impact of resource wealth on income growth. We develop a variation of the Ramsey-Cass-Koopmans model with endogenous growth to explain the phenomenon. In this model, consumers trade off leisure versus consumption, and firms trade off innovation efforts versus manufacturing. For this model, we show that an increase in resource income frustrates economic growth in two ways: directly by reducing work effort and indirectly by inducing a smaller proportion of the labor force to engage in innovation.

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Bibliographic Info

Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c010_054.

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Length: 31 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:deg:conpap:c010_054

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Keywords: Natural Resources; Growth; Innovation;

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References

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  1. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
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Cited by:
  1. 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.

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