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Natural resource abundance and human capital accumulation

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  • Stijns, Jean-Philippe

Abstract

This study examines indicators of human capital accumulation together with data for natural resource abundance and rents in a panel of 102 countries running from 1970 to 1999. Mineral wealth makes a positive and marked difference on human capital accumulation. Matching on observables reveals that cross-country results are not driven by a third factor such as overall economic development. Political stability does seem to affect both human capital accumulation and subsoil wealth, but not enough to overturn my conclusions. Instrumentation reveals that reverse causality running from education to natural resources does not drive the results. Estimation of a panel VAR indicates that, over the three decades, a $1 shock to resource rent generates five cents of extra educational expenditure per year. These results are consistent with Hirschman’s conjecture that enclave economies have weaker production leakages but stronger government revenue linkages than other activities. The “wealth channel” identified in this paper implies that caution should be exerted when discouraging countries from exploiting their mineral wealth, especially for countries where human capital is scarce.
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Suggested Citation

  • Stijns, Jean-Philippe, 2006. "Natural resource abundance and human capital accumulation," World Development, Elsevier, vol. 34(6), pages 1060-1083, June.
  • Handle: RePEc:eee:wdevel:v:34:y:2006:i:6:p:1060-1083
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    More about this item

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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