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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
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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. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Institutions and the resource curse," GE, Growth, Math methods 0210004, EconWPA.
  2. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
  3. Auty, Richard M., 2001. "The political economy of resource-driven growth," European Economic Review, Elsevier, vol. 45(4-6), pages 839-846, May.
  4. 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.
  5. Torvik, Ragnar, 2001. "Learning by doing and the Dutch disease," European Economic Review, Elsevier, vol. 45(2), pages 285-306, February.
  6. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
  7. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  8. Xavier Sala-i-Martin & Arvind Subramanian, 2003. "Addressing the Natural Resource Curse: An Illustration from Nigeria," NBER Working Papers 9804, National Bureau of Economic Research, Inc.
  9. Jean-Philippe Stijns, 2001. "Natural Resource Abundance And Economic Growth Revisited," Development and Comp Systems 0103001, EconWPA.
  10. Peter H. Lindert, 2003. "Voice and Growth: Was Churchill Right?," NBER Working Papers 9749, National Bureau of Economic Research, Inc.
  11. 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.
  12. Daron Acemoglu, 1993. "Reward Structures and the Allocation of Talent," CEP Discussion Papers dp0143, Centre for Economic Performance, LSE.
  13. Bulte Erwin & Damania Richard, 2008. "Resources for Sale: Corruption, Democracy and the Natural Resource Curse," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-30, February.
  14. Vito Tanzi, 1998. "Corruption Around the World," IMF Working Papers 98/63, International Monetary Fund.
  15. Collier, Paul & Hoeffler, Anke, 1998. "On Economic Causes of Civil War," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 563-73, October.
  16. Carlos Leite & Jens Weidmann, 1999. "Does Mother Nature Corrupt," IMF Working Papers 99/85, International Monetary Fund.
  17. Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, vol. 89(1), pages 22-46, March.
  18. 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.
  19. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, vol. 61(2), pages 527-542, April.
  20. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
  21. Tan, Gerald, 1983. "Export instability, export growth and GDP growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 219-227.
  22. Arvind Subramanian & Xavier Sala-i-Martin, 2003. "Addressing the Natural Resource Curse," IMF Working Papers 03/139, International Monetary Fund.
  23. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
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Citations

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Cited by:
  1. Lubna Hasan, 2012. "Myths and Realities of Long-run Development: A Look at Deeper Determinants," Working Papers id:4992, eSocialSciences.
  2. 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.
  3. 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.
  4. 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.
  5. Andersen, Jørgen Juel & Aslaksen, Silje, 2008. "Constitutions and the resource curse," Journal of Development Economics, Elsevier, vol. 87(2), pages 227-246, October.
  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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