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Resource Dependence, Knowledge Creation, And Growth: Revisiting The Natural Resource Curse


  • Heinz Welsch

    () (Department of Economics, University of Oldenberg)


Several explanations have been put forward for the phenomenon - referred to as ¡®curse of natural resources¡¯ - that resource-rich countries tend to display low rates of economic growth. This paper studies an R&D-related explanation, using an endogenous growth model with natural resources and R&D-based technological change. For suitable values of preference parameters, the model predicts that knowledge creation as well as capital formation are inversely related to natural-resource intensity, thus providing an explanation for the ¡®curse¡¯. Estimation results on cross-sectional data for 77 countries (1965-1998) are consistent with these predictions. Basic results of the paper remain valid when institutional aspects (corruption, democracy) are included.

Suggested Citation

  • Heinz Welsch, 2008. "Resource Dependence, Knowledge Creation, And Growth: Revisiting The Natural Resource Curse," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 33(1), pages 45-70, June.
  • Handle: RePEc:jed:journl:v:33:y:2008:i:1:p:45-70

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    References listed on IDEAS

    1. David Kaplan, 2004. "Manufacturing in South Africa over the last decade: a review of industrial performance and policy," Development Southern Africa, Taylor & Francis Journals, vol. 21(4), pages 623-644.
    2. Barten, A. P., 1969. "Maximum likelihood estimation of a complete system of demand equations," European Economic Review, Elsevier, vol. 1(1), pages 7-73.
    3. Tybout, James R. & Westbrook, M. Daniel, 1995. "Trade liberalization and the dimensions of efficiency change in Mexican manufacturing industries," Journal of International Economics, Elsevier, vol. 39(1-2), pages 53-78, August.
    4. Denis Audet, 2007. "Smooth as Silk? A First Look at the Post MFA Textiles and Clothing Landscape," Journal of International Economic Law, Oxford University Press, vol. 10(2), pages 267-284, June.
    5. Simon Roberts & John T. Thoburn, 2004. "Globalization and the South African textiles industry: impacts on firms and workers," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(1), pages 125-139.
    6. Wales, Terence J., 1977. "On the flexibility of flexible functional forms : An empirical approach," Journal of Econometrics, Elsevier, vol. 5(2), pages 183-193, March.
    7. Simon Roberts & John Thoburn, 2003. "Adjusting to Trade Liberalisation: The Case of Firms in the South African Textile Sector," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 12(1), pages 74-103, March.
    8. Naudé, Wim & Rossouw, Riaan, 2008. "South African quotas on textile imports from China: A policy error?," Journal of Policy Modeling, Elsevier, vol. 30(5), pages 737-750.
    9. Lennart Petersson, 2003. "Production Fragmentation And Specialisation, With Special Reference To The Sadc Textile And Clothing Industry," South African Journal of Economics, Economic Society of South Africa, vol. 71(4), pages 762-791, December.
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    Cited by:

    1. Khalid R. Alkhater, 2012. "The Rentier Predatory State Hypothesis: An Empirical Explanation Of The Resource Curse," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(4), pages 29-60, December.

    More about this item


    Endogenous Technological Change; Economic Growth; Natural Resource Curse; Natural Resources;

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation


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