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Further investigation of natural resources and economic growth: Do natural resources depress economic growth?

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  • Gerelmaa, Lkhagva
  • Kotani, Koji

Abstract

One of the surprising findings in the economic literature is that natural resource-rich countries tend to have slower economic growth than resource-poor countries do, i.e., the natural resource curse and Dutch disease. In this paper, we revisit these issues by applying quantile regression and using the most updated data. The results demonstrate that resource-intensive countries in 1970 suffered from slower economic growth than did resource-poor countries over the next 20 years, consistent with Sachs and Warner (1995, 1997, 2001). However, contrary to our initial expectation, we find that the natural resource abundance in 1990 had positive impacts on economic growth between 1990 and 2010. We further test Dutch disease theory, and the result contradicts the Dutch disease hypothesis. Overall, our analysis suggests that in the period from 1970 to 1990, the hypotheses of a resource curse and Dutch disease hold. However, in the period from 1990 to 2010, these hypotheses no longer hold because manufacturing sectors have grown sufficiently even in resource-rich countries.

Suggested Citation

  • Gerelmaa, Lkhagva & Kotani, Koji, 2016. "Further investigation of natural resources and economic growth: Do natural resources depress economic growth?," Resources Policy, Elsevier, vol. 50(C), pages 312-321.
  • Handle: RePEc:eee:jrpoli:v:50:y:2016:i:c:p:312-321
    DOI: 10.1016/j.resourpol.2016.10.004
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    Cited by:

    1. repec:eme:jespps:jes-05-2017-0114 is not listed on IDEAS
    2. Mohammad Reza Farzanegan & Marcel Thum, 2017. "Oil Dependency and Quality of Education: New Empirical Evidence," MAGKS Papers on Economics 201745, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    3. repec:eco:journ1:2017-02-38 is not listed on IDEAS
    4. repec:asi:aeafrj:2017:p:952-958 is not listed on IDEAS

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