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Resource Curse or Debt Overhang?

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Author Info
Osmel Manzano
Roberto Rigobon

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Abstract

It has been widely believed that resource abundant economies grow less than other economies. In a very influential paper, Sachs and Warner (1997), point out that there is a negative relationship between resource abundance and growth. Two important econometric problems are present in the traditional empirical literature: First, the result might depend on factors that are correlated with primary exports but that have been excluded from the regression. Second, total GDP includes the production in the resource sector that has been declining in the last 30 years. We correct for those issues. Our results indicate that the so called 'Natural Resource Curse' might be related to a debt overhang. In the 70's when commodities' prices were high, natural resource abundant countries used them as collateral for debt. The 80's witnessed an important fall in the prices that drove these countries to debt crises. When we estimate the model taking these into account, we found that the effect of resource abundance disappears.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8390.

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Date of creation: Jul 2001
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Handle: RePEc:nbr:nberwo:8390

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O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
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  2. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
  3. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1995-1), pages 1-118. [Downloadable!]
  5. Davis, Graham A., 1995. "Learning to love the Dutch disease: Evidence from the mineral economies," World Development, Elsevier, vol. 23(10), pages 1765-1779, October. [Downloadable!] (restricted)
  6. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
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  1. Christa N. Brunnschweiler & Erwin H. Bulte, 2006. "The Resource Curse Revisited and Revised: A Tale of Paradoxes and Red Herrings," Economics working paper series 06/61, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
    Other versions:
  2. James L. Butkiewicz & Halit Yanikkaya, 2007. "Minerals, Openness, Institutions and Growth: An Empirical Analysis," Working Papers 07-04, University of Delaware, Department of Economics. [Downloadable!]
  3. Kiringai, Jane, 2002. "Debt and PRSP Conditionality," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  4. Francisco Monaldi & Rosa Amelia González de Pacheco & Richard Obuchi & Michael Penfold, 2006. "Political Institutions, Policymaking Processes, and Policy Outcomes in Venezuela," RES Working Papers 3196, Inter-American Development Bank, Research Department. [Downloadable!]
  5. Ricardo Hausmann & Roberto Rigobon, 2003. "An Alternative Interpretation of the 'Resource Curse': Theory and Policy Implications," NBER Working Papers 9424, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Stela Cani, 2008. "Resource Abundance, Mineral Funds and Institutional Quality," Economics & Management Discussion Papers em-dp2009-04, Henley Business School, Reading University. [Downloadable!]
  7. Lederman, Daniel & Maloney, William F., 2003. "Trade structure and growth," Policy Research Working Paper Series 3025, The World Bank. [Downloadable!]
  8. Mauricio Mesquita Moreira, 2004. "Fear of China: Is there a future for manufacturing in Latin America?," Development and Comp Systems 0412008, EconWPA. [Downloadable!]
    Other versions:
  9. Christa N. Brunnschweiler, 2006. "Cursing the blessings? Natural resource abundance, institutions, and economic growth," Economics working paper series 06/51, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
    Other versions:
  10. Maloney, William F., 2002. "Missed opportunities - innovation and resource-based growth in Latin America," Policy Research Working Paper Series 2935, The World Bank. [Downloadable!]
  11. Bravo-Ortega, Claudio & de Gregorio, Jose, 2005. "The relative richness of the poor? natural resources, human capital, and economic growth," Policy Research Working Paper Series 3484, The World Bank. [Downloadable!]
    Other versions:
  12. Rambaldi, Alicia N. & Hall, Greg & Brown, Richard P.C., 2006. "Re-testing the Resource Curse Hypothesis Using Panel Data and an Improved Measure of Resource Intensity," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25289, International Association of Agricultural Economists. [Downloadable!]
  13. Ludvig Söderling, 2002. "Escaping the Curse of Oil? The Case of Gabon," IMF Working Papers 02/93, International Monetary Fund. [Downloadable!]
  14. Kenneth W Clements & Yihui Lan & John Roberts, 2007. "Exchange-Rate Economics for the Resources Sector," Economics Discussion / Working Papers 07-13, The University of Western Australia, Department of Economics. [Downloadable!]
  15. Francisco Monaldi & Rosa Amelia González de Pacheco & Richard Obuchi & Michael Penfold, 2006. "Instituciones políticas, procesos de diseño de políticas y resultados de las políticas en Venezuela," RES Working Papers 3197, Inter-American Development Bank, Research Department. [Downloadable!]
  16. Lederman, Daniel & Maloney, William F., 2008. "In search of the missing resource curse," Policy Research Working Paper Series 4766, The World Bank. [Downloadable!]
  17. Dalgaard, Carl-Johan & Olsson, Ola, 2006. "Windfall Gains, Political Economy, and Economic Development," Working Papers in Economics 223, Göteborg University, Department of Economics. [Downloadable!]
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