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Frontier Expansion and Economic Development

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  • Edward B. Barbier

Abstract

Although finding new frontiers or reserves of natural resources to exploit has been the basis of much of global economic development for the past 500 years, frontier‐based development does not appear to be producing sustained high rates of growth in today's poorer economies. Through a two‐sector model of frontier expansion and economic growth in a resource‐dependent small open economy, this article demonstrates that such expansion will lead inevitably to a boom and bust pattern of long‐run development, even if the economy's terms of trade or commodity prices remain unchanged. Initially, it is always optimal for the economy to choose the maximum rate of frontier expansion and thus ensure an immediate economic boom. However, an eventual economic decline is unavoidable. This result provides an alternative explanation of recent empirical evidence that resource‐abundant developing countries display lower than expected long‐run rates of growth. (JEL O13, O41, Q32, Q33)

Suggested Citation

  • Edward B. Barbier, 2005. "Frontier Expansion and Economic Development," Contemporary Economic Policy, Western Economic Association International, vol. 23(2), pages 286-303, April.
  • Handle: RePEc:bla:coecpo:v:23:y:2005:i:2:p:286-303
    DOI: 10.1093/cep/byi022
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    File URL: https://doi.org/10.1093/cep/byi022
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Krystof Obidzinski & Ahmad Dermawan & Adi Hadianto, 2014. "Oil palm plantation investments in Indonesia’s forest frontiers: limited economic multipliers and uncertain benefits for local communities," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(6), pages 1177-1196, December.
    2. Terheggen, Anne, 2010. "The new kid in the forest: the impact of China's resource demand on Gabon's tropical timber value chain," MPRA Paper 37982, University Library of Munich, Germany.
    3. Boyce, John R. & Herbert Emery, J.C., 2011. "Is a negative correlation between resource abundance and growth sufficient evidence that there is a "resource curse"?," Resources Policy, Elsevier, vol. 36(1), pages 1-13, March.
    4. Silvana Sandonato & Henry Willebald, 2018. "Natural Capital, Domestic Product and Proximate Causes of Economic Growth: Uruguay in the Long Run, 1870–2014," Sustainability, MDPI, Open Access Journal, vol. 10(3), pages 1-26, March.
    5. Zoubida Mahcane & Mayou Abdellah & Mohamed Zergoune & Miloud Lacheheb, 2019. "Land Degradation and Economic Development in Algeria," International Journal of Energy Economics and Policy, Econjournals, vol. 9(1), pages 137-142.
    6. Edward B. Barbier & Michael Rauscher, 2005. "Trade and Development in a Labor Surplus Economy," CESifo Working Paper Series 1481, CESifo Group Munich.

    More about this item

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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