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Natural Resources and Economic Growth: Some Theory and Evidence

  • Dustin Chambers

    (Department of Economics and Finance, Salisbury University)

  • Jang-Ting Guo

    (Department of Economics, 4123 Sproul Hall, University of California)

We develop a one-sector endogenous growth model in which renewable natural resources are both a factor of production and measure of environmental quality. Along the balanced growth path, sustained economic growth and a non-deteriorating environment are shown to coexist. Moreover, steady-state economic growth and natural-resource utilization are positively related. Empirically, a cross-country growth regression that includes a broad measure of productive natural resources ¡ª the Ecological Footprint ¡ª provides strong support. Our estimation results also suggest conservation costs are minimal, and growth strategies based on greater physical capital formation and trade openness outperform those relying on more intensive utilization of the environment.

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Article provided by Society for AEF in its journal Annals of Economics and Finance.

Volume (Year): 10 (2009)
Issue (Month): 2 (November)
Pages: 367-389

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Handle: RePEc:cuf:journl:y:2009:v:10:i:2:p:367-389
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  1. 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.
  2. Winford H. Masanjala & Chris Papageorgiou, 2008. "Rough and lonely road to prosperity: a reexamination of the sources of growth in Africa using Bayesian model averaging," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(5), pages 671-682.
  3. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
  4. 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.
  5. Stokey, Nancy L, 1998. "Are There Limits to Growth?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 1-31, February.
  6. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
  7. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  8. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
  9. Haberl, Helmut & Erb, Karl-Heinz & Krausmann, Fridolin, 2001. "How to calculate and interpret ecological footprints for long periods of time: the case of Austria 1926-1995," Ecological Economics, Elsevier, vol. 38(1), pages 25-45, July.
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