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Resource Abundance, Poverty and Development

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  • Erwin H. Bulte
  • Richard Damania
  • Robert T. Deacon

Abstract

The negative correlation between resource endowments and GDP growth remains one of the most robust findings in the empirical growth literature, and has been coined the “resource curse hypothesis”. The policy consequences of this result are potentially far reaching. If natural resources are an inescapable curse, this may imply that countries richly endowed with natural resources can only develop by turning their backs on their comparative advantage and diversifying into other non-resource based activities. This papers analyzes whether the negative statistical relationship between natural resource abundance and economic growth spills over to other important economic and social indicators. The impact of resource wealth on several proxies of economic underdevelopment and welfare are scrutinized. While underdevelopment and welfare are clearly not independent of economic growth, it is known that there exist important differences between these variables. The research presented in this paper represents a step forward in the understanding of the resource curse, and the channels through which it is manifested.

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Bibliographic Info

Paper provided by Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) in its series Working Papers with number 04-03.

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Length: 31 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:fao:wpaper:0403

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Postal: Agricultural Sector in Economic Development Service FAO Viale delle Terme di Caracalla 00153 Rome Italy
Phone: +39(6) 57051
Fax: +39 06 57055522
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Web page: http://www.fao.org/es/esa/
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Related research

Keywords: Agricultural development; Developing countries; Development policies; Economic analysis; Economic development; Economic growth; Natural resources; Poverty; Rural development; Resource Abundance. Social welfare;

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References

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  1. Robinson, James A. & Torvik, Ragnar & Verdier, Thierry, 2006. "Political foundations of the resource curse," Journal of Development Economics, Elsevier, vol. 79(2), pages 447-468, April.
  2. Peter Lindert, 2003. "Voice and Growth: Was Churchill Right?," Working Papers 26, University of California, Davis, Department of Economics.
  3. Stijns, Jean-Philippe C., 2001. "Natural Resource Abundance And Economic Growth Revisited," Berkeley Economics Dissertations-in-Progress Series 25127, University of California, Berkeley, Department of Agricultural and Resource Economics.
  4. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2004. "Institutions and the Resource Curse," DEGIT Conference Papers c009_012, DEGIT, Dynamics, Economic Growth, and International Trade.
  5. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
  6. Xavier Sala-i-Martin & Arvind Subramanian, 2013. "Addressing the Natural Resource Curse: An Illustration from Nigeria," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 22(4), pages 570-615, August.
  7. Richard Damania & Erwin Bulte, 2003. "Resources for Sale: Corruption, Democracy and the Natural Resource Curse," Centre for International Economic Studies Working Papers 2003-20, University of Adelaide, Centre for International Economic Studies.
  8. Carlos Leite & Jens Weidmann, 1999. "Does Mother Nature Corrupt," IMF Working Papers 99/85, International Monetary Fund.
  9. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, vol. 61(2), pages 527-542, April.
  10. Torvik, Ragnar, 2001. "Learning by doing and the Dutch disease," European Economic Review, Elsevier, vol. 45(2), pages 285-306, February.
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  16. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
  17. Jonathan Isham & Michael Woolcock & Lant Pritchett & Gwen Busby, 2003. "The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth," Middlebury College Working Paper Series 0308, Middlebury College, Department of Economics.
  18. Arvind Subramanian & Xavier Sala-i-Martin, 2003. "Addressing the Natural Resource Curse," IMF Working Papers 03/139, International Monetary Fund.
  19. Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, vol. 89(1), pages 22-46, March.
  20. Auty, Richard M., 2001. "The political economy of resource-driven growth," European Economic Review, Elsevier, vol. 45(4-6), pages 839-846, May.
  21. Tan, Gerald, 1983. "Export instability, export growth and GDP growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 219-227.
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Citations

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Cited by:
  1. Lubna Hasan, 2006. "Myths and Realities of Long-run Development : A Look at Deeper Determinants," Development Economics Working Papers 22193, East Asian Bureau of Economic Research.
  2. Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2007. "Экономическая Политика, Качество Институтов И Механизмы "Ресурсного Проклятия"
    [Economic Policy, Quality of Institution
    ," MPRA Paper 22454, University Library of Munich, Germany.
  3. Jørgen Juel Andersen & Silje Aslaksen, 2006. "Constitutions and the resource curse," Working Paper Series 7506, Department of Economics, Norwegian University of Science and Technology.
  4. Katharina Wick & Erwin Bulte, 2006. "Contesting resources – rent seeking, conflict and the natural resource curse," Public Choice, Springer, vol. 128(3), pages 457-476, September.
  5. Deacon, Robert & Mueller, Bernardo, 2004. "Political Economy and Natural Resource Use," University of California at Santa Barbara, Economics Working Paper Series qt68g1n1v8, Department of Economics, UC Santa Barbara.
  6. Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2008. "Mechanisms of Resource Curse, Economic Policy and Growth," MPRA Paper 20570, University Library of Munich, Germany.

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