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Resource-based cities and the Dutch disease

Author

Listed:
  • Takatsuka, Hajime
  • Zeng, Dao-Zhi
  • Zhao, Laixun

Abstract

This paper examines the relationship between resource development and industrialization. When transport costs are high, the region with a more valuable natural resource enjoys a higher welfare than the other region. However, as transport costs decrease, firms begin to move out of the region, causing the Dutch disease to occur, initially in terms of industry share, and eventually in terms of welfare too when transport is sufficiently free. A resource boom in intermediate inputs may strengthen the tendency for manufacturing agglomeration in the same region, but a resource boom in consumption inputs will weaken this tendency. The model thus provides insight for cities to utilize their limited resources efficiently.

Suggested Citation

  • Takatsuka, Hajime & Zeng, Dao-Zhi & Zhao, Laixun, 2015. "Resource-based cities and the Dutch disease," Resource and Energy Economics, Elsevier, vol. 40(C), pages 57-84.
  • Handle: RePEc:eee:resene:v:40:y:2015:i:c:p:57-84
    DOI: 10.1016/j.reseneeco.2015.01.003
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    References listed on IDEAS

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    Cited by:

    1. Rafael González-Val & Fernando Pueyo, 2018. "Natural Resources, Economic Growth and Geography," Working Papers 2018.26, Fondazione Eni Enrico Mattei.

    More about this item

    Keywords

    Resource-based cities; Dutch disease; Resource goods; Industrialization; Transport costs;

    JEL classification:

    • F1 - International Economics - - Trade
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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