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Re-evaluating the impact of natural resources on economic growth

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Author Info
Nuno Torres () (PhD Student of The Doctoral Programme in Economics at Faculdade de Economia da Universidade do Porto.)
Oscar Afonso () (CEMPRE and Faculdade de Economia, Universidade do Porto, Portugal)
Abstract

In this study we re-evaluate the impact of natural resources on economic growth. The reassessment is based on a growth model where, using panel-data analysis, natural-resource variables (geographically diffused and concentrated) affect the efficiency gains of labour and capital in production. We find an overall positive effect on growth arising from the increase in capital efficiency associated with concentrated resources, exactly the kind of resources that explain the resource curse in recent cross-section studies. We detect a negative effect of concentrated resources on labour efficiency only when either the resource proxies are unadjusted for re-export distortion (even with a fixed institutional quality, contrary to cross-section studies), or both the fixed country and time effects are not considered after the referred adjustment. Our results also dismiss a negative effect of the adjusted diffuse resources measure on capital efficiency if we assume a constant institutional quality, and fixed country and time effects.

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Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 278.

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Length: 39 pages
Date of creation: Jun 2008
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Handle: RePEc:por:fepwps:278

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Keywords: Natural resources Economic growth Economywide Country Studies Panel data

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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O50 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - General

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