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Further investigation of natural resources and economic growth: Do natural resources depress economic growth?

One of the surprising findings in the economic development literature is that natural resource-rich countries tend to have slower economic growth than resource-poor countries, i.e., the natural resource curse and Dutch disease. In this paper, we revisit these issues by applying quantile regression and using the most updated data. The results demonstrate that resource-intensive countries in 1970 suffered from slower economic growth than resource-poor countries over the next 20 years, consistent with Sachs and Warner (1995, 1997, 2001). However, contrary to initial expectation, we find that natural resource abundance in 1990 had positive impacts on economic growth between 1990 and 2010. We further test the Dutch disease theory, and the result contradicts the hypothesis. Overall, our analysis suggests that in the period from 1970 to 1990, the hypotheses of a resource curse and Dutch disease hold. However, in the period from 1990 to 2010, these hypotheses no longer hold because manufacturing sectors have grown suffciently even in resource-rich countries.

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File URL: http://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2013_07.pdf
File Function: First version, 2013
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Paper provided by Research Institute, International University of Japan in its series Working Papers with number EMS_2013_07.

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Length: 37 pages
Date of creation: Jul 2013
Handle: RePEc:iuj:wpaper:ems_2013_07
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