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The implications of natural resource exports for non-resource trade

  • Harding, Torfinn
  • Venables, Anthony J

Foreign exchange windfalls such as those from natural resource revenues change non-resource exports, imports, and the capital account. We study the balance between these responses and, using data on 41 resource exporters for 1970-2006, show that the response to a dollar of resource revenue is, approximately, to decrease non-resource exports by 75 cents and increase imports by 25 cents, implying a negligible effect on foreign saving. The negative per dollar impact on exports is larger for countries which have good institutions and higher income levels. These countries have a higher share of manufacturing in their non-resource exports, and we show that manufactures are more susceptible than other products to being crowded out by resource exports.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9318.

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Date of creation: Jan 2013
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Handle: RePEc:cpr:ceprdp:9318
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