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Development and Growth in Mineral-Rich Countries

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  • Gylfason, Thorvaldur

Abstract

This paper describes some of the ways in which mineral rents and their management influence economic growth and other determinants of growth as well as some of the reasons why many mineral-rich countries have not managed very well to divert their resource rents to furthering economic and social development – that is, why natural capital tends to crowd out human, social, financial and real capital. The empirical evidence of these linkages is presented in two rounds. First, we allow World Bank data covering 164 countries in 1960-2000 to speak for themselves through a sequence of bilateral correlations that suggest an inverse relationship between natural resource dependence and growth via human capital. We then repeat the exercise for two aspects of social capital, corruption and democracy, suggesting an additional adverse effect of natural resource dependence via social capital on growth. In the second round, we test for the robustness of natural resource dependence as a determinant of long-run growth by estimating a series of growth regressions for the same 164 countries.

Suggested Citation

  • Gylfason, Thorvaldur, 2008. "Development and Growth in Mineral-Rich Countries," CEPR Discussion Papers 7031, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7031
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Angeliki N. Menegaki, 2013. "An Antidote to the Resource Curse: The Blessing of Renewable Energy," International Journal of Energy Economics and Policy, Econjournals, vol. 3(4), pages 321-332.
    2. Kolstad, Ivar & Søreide, Tina, 2009. "Corruption in natural resource management: Implications for policy makers," Resources Policy, Elsevier, vol. 34(4), pages 214-226, December.
    3. Blanco, Luisa & Grier, Robin, 2012. "Natural resource dependence and the accumulation of physical and human capital in Latin America," Resources Policy, Elsevier, vol. 37(3), pages 281-295.
    4. Fofack, Hippolyte, 2009. "Africa and Arab Gulf states : divergent development paths and prospects for convergence," Policy Research Working Paper Series 5025, The World Bank.
    5. Thorvaldur Gylfason, 2011. "Natural Resource Endowment: A Mixed Blessing?," CESifo Working Paper Series 3353, CESifo Group Munich.
    6. Wiig, Arne & Kolstad, Ivar, 2012. "If diversification is good, why don't countries diversify more? The political economy of diversification in resource-rich countries," Energy Policy, Elsevier, vol. 40(C), pages 196-203.
    7. Kolstad, Ivar & Wiig, Arne, 2009. "It's the rents, stupid! The political economy of the resource curse," Energy Policy, Elsevier, vol. 37(12), pages 5317-5325, December.
    8. Carmignani, Fabrizio, 2013. "Development outcomes, resource abundance, and the transmission through inequality," Resource and Energy Economics, Elsevier, vol. 35(3), pages 412-428.
    9. Bleischwitz, Raimund & Dittrich, Monika & Pierdicca, Chiara, 2012. "Coltan from Central Africa, international trade and implications for any certification," Resources Policy, Elsevier, vol. 37(1), pages 19-29.
    10. Sheraz, Umar, 2014. "Foresight as a tool for sustainable development in natural resources: The case of mineral extraction in Afghanistan," Resources Policy, Elsevier, vol. 39(C), pages 92-100.
    11. Raimund Bleischwitz, 2010. "International economics of resource productivity – Relevance, measurement, empirical trends, innovation, resource policies," International Economics and Economic Policy, Springer, vol. 7(2), pages 227-244, August.
    12. Carmignani, Fabrizio & Avom, Desire, 2010. "The social development effects of primary commodity export dependence," Ecological Economics, Elsevier, vol. 70(2), pages 317-330, December.
    13. Cockx, Lara & Francken, Nathalie, 2014. "Extending the concept of the resource curse: Natural resources and public spending on health," Ecological Economics, Elsevier, vol. 108(C), pages 136-149.
    14. Cockx, Lara & Francken, Nathalie, 2014. "Extending the concept of the resource curse: natural resources and public spending on health," IOB Working Papers 2014.01, Universiteit Antwerpen, Institute of Development Policy (IOB).

    More about this item

    Keywords

    Economic growth; natural resources; social policy;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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