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International Trade, Exhaustible-Resource Abundance and Economic Growth

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  • Beatrix Gaitan

    (Free University of Berlin)

  • Terry Roe

    (University of Minnesota)

Abstract

Countries with oil and other natural resources have grown less rapidly than those countries without. This phenomenon is known as the "natural resource curse". We develop an infinite-horizon, two-country model of trade in which countries are identical, except that one country is endowed with deposits of an exhaustible resource and the other is not. Within the context of the model, we show that this phenomenon can be explained in part by an inelastic demand for the exhaustible resource that increases growth in trade revenues and induces the resource-abundant country to invest relatively less than the country lacking in exhaustible resources. These results are derived analytically and illustrated by an empirical analysis based on plausible parameters obtained from data. (Copyright: Elsevier)

Suggested Citation

  • Beatrix Gaitan & Terry Roe, 2012. "International Trade, Exhaustible-Resource Abundance and Economic Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 72-93, January.
  • Handle: RePEc:red:issued:06-100
    DOI: 10.1016/j.red.2011.08.002
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    2. Driouchi, Ahmed, 2014. "Testing of Natural Resources as Blessing or Curse to the Knowledge Economy in Arab Countries," MPRA Paper 58598, University Library of Munich, Germany.
    3. Stéphane Gonzalez & Fatma Zahra Rostom, 2019. "Sharing the Global Benefits of Finite Natural Resource Exploitation: A Dynamic Coalitional Stability Perspective," Working Papers 1937, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    4. Driouchi, Ahmed & Harkat, Tahar, 2016. "Knowledge Economy, Global Innovation Indices, Rents and Governance in Arab Economies," MPRA Paper 73507, University Library of Munich, Germany.
    5. CHARLES Ayobola & MESAGAN Ekundayo & SAIBU Muibi, 2018. "Resource Endowment And Export Diversification: Implications For Growth In Nigeria," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 13(1), pages 29-40, December.
    6. Ali Yunes Merza Amanalla Mohammed, 2018. "International Trade and its Impact on CO2 Emission: Empirical Study of Bahrain," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 8(2), pages 318-333, February.
    7. Tamasiga, Phemelo & Bondarev, Anton, 2014. "Differential games approach to trade with exhaustible resources," Working papers 2014/14, Faculty of Business and Economics - University of Basel.
    8. Spolador, Humberto Francisco Silva & Roe, Terry L., 2012. "The Role of Agriculture on the Recent Brazilian Economic Growth," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125822, International Association of Agricultural Economists.
    9. Humberto F.S. Spolador & Terry L. Roe, 2013. "The Role of Agriculture on the Recent Brazilian Economic Growth: How Agriculture Competes for Resources," The Developing Economies, Institute of Developing Economies, vol. 51(4), pages 333-359, December.

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