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Natural Resource Abundance and Economic Growth

Author

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  • Jeffrey D. Sachs

    (Center for Sustainable Development, Columbia University, New York, NY 10027, USA)

  • Andrew M. Warner

    (International Monetary Fund, 700 19th Street NW, Washington, DC 20431)

Abstract

One of the surprising features of modern economic growth is that economies with abundant natural resources have tended to grow less rapidly than natural resource-scarce economies. In this paper we show that economies with a high ratio of natural resource exports to GDP in 1971 (the base year) tended to have low growth rates during the subsequent period 1971-89. This negative relationship holds true even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, govern ment effciency, investment rates, and other variables. We explore the possible pathways for this negative relationship by studying the cross-country effects of resource endowments on trade policy, bureaucratic effciency, and other deter minants of growth. We also provide a simple theoretical model of endogenous growth that might help to explain the observed negative relationship.

Suggested Citation

  • Jeffrey D. Sachs & Andrew M. Warner, 2025. "Natural Resource Abundance and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 26(2), pages 891-931, November.
    • Handle: RePEc:cuf:journl:y:2025:v:26:i:2:sachswarner
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