The relative richness of the poor? natural resources, human capital, and economic growth
AbstractAre natural resources a blessing or a curse? The authors present a model in which natural resources have a positive effect on the level of income and a negative effect on its growth rate. The positive and permanent effect on income implies a welfare gain. There is a growth effect stemming from a composition effect. However, the authors show that this effect can be offset by having a large level of human capital. They test their model using panel data for the period 1970-90. They extend the usual specifications for economic growth regressions by incorporating an interaction term between human capital and natural resources, showing that high levels of human capital may outweigh the negative effects of the natural resource abundance on growth. The authors also review the historical experience of Scandinavian countries, which in contrast to Latin America, another region well-endowed with natural resources, shows how it is possible to grow fast based on natural resources.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3484.
Date of creation: 01 Jan 2005
Date of revision:
Capital Markets and Capital Flows; Economic Theory&Research; Decentralization; Environmental Economics&Policies; Banks&Banking Reform; Economic Theory&Research; Environmental Economics&Policies; Economic Growth; Inequality; Governance Indicators;
Other versions of this item:
- Claudio Bravo-Ortega & Jose De Gregorio, . "The Relative Richness of the Poor? Natural Resources, Human Capital and Economic Growth," Working Papers Central Bank of Chile 139, Central Bank of Chile.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-01-16 (All new papers)
- NEP-DEV-2005-01-16 (Development)
- NEP-EDU-2005-01-16 (Education)
- NEP-ENV-2005-01-16 (Environmental Economics)
- NEP-LAM-2005-01-16 (Central & South America)
- NEP-MAC-2005-01-16 (Macroeconomics)
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