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The Implications of Natural Resource Exports for Non-Resource Trade

Listed author(s):
  • Torfinn Harding
  • Anthony J Venables

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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File URL: http://www.oxcarre.ox.ac.uk/files/OxCarreRP2013103.pdf
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Paper provided by Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford in its series OxCarre Working Papers with number 103.

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Date of creation: 2013
Handle: RePEc:oxf:oxcrwp:103
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