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Capital Accumulation and Resource Depletion: A Hartwick Rule Counterfactual

  • Kirk Hamilton

    ()

  • Giovanni Ruta
  • Liaila Tajibaeva

How much produced capital would resource-abundant countries have today if they had actually followed the Hartwick Rule (invest resource rents in other assets) over the last 30 years? We employ time series data on investment and rents on exhaustible resource extraction for 70 countries to answer this question. The results are striking: Venezuela, Trinidad and Tobago, and Gabon would all have as much produced capital as South Korea, while Nigeria would have five times its current level. A specific rule for sustainability – maintain positive constant genuine investment – is shown to lead to unbounded consumption. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s10640-006-0011-2
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Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 34 (2006)
Issue (Month): 4 (August)
Pages: 517-533

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Handle: RePEc:kap:enreec:v:34:y:2006:i:4:p:517-533
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100263

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  9. Pritchett, Lant, 2000. "The tyranny of concepts - CUDIE (Cumulated, Depreciated Investment Effort) is NOT capital," Policy Research Working Paper Series 2341, The World Bank.
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  12. Martin L. Weitzman & Karl-Gustaf Lofgren, 1996. "On the Welfare Significance of Green Accounting as Taught by Parable," Harvard Institute of Economic Research Working Papers 1755, Harvard - Institute of Economic Research.
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