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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.

Suggested Citation

  • Elissaios Papyrakis & Reyer Gerlagh, 2005. "Natural Resources, Innovation, and Growth," DEGIT Conference Papers c010_054, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c010_054
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    File URL: http://degit.sam.sdu.dk/papers/degit_10/C010_054.pdf
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    References listed on IDEAS

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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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    More about this item

    Keywords

    Natural Resources; Growth; Innovation;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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