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Re-evaluating the impact of natural resources on economic growth

Author

Listed:
  • Nuno Torres

    (PhD Student of The Doctoral Programme in Economics at Faculdade de Economia da Universidade do Porto.)

  • Oscar Afonso

    (CEMPRE and Faculdade de Economia, Universidade do Porto, Portugal)

Abstract

In this study we re-evaluate the impact of natural resources on economic growth. The reassessment is based on a growth model where, using panel-data analysis, natural-resource variables (geographically diffused and concentrated) affect the efficiency gains of labour and capital in production. We find an overall positive effect on growth arising from the increase in capital efficiency associated with concentrated resources, exactly the kind of resources that explain the resource curse in recent cross-section studies. We detect a negative effect of concentrated resources on labour efficiency only when either the resource proxies are unadjusted for re-export distortion (even with a fixed institutional quality, contrary to cross-section studies), or both the fixed country and time effects are not considered after the referred adjustment. Our results also dismiss a negative effect of the adjusted diffuse resources measure on capital efficiency if we assume a constant institutional quality, and fixed country and time effects.

Suggested Citation

  • Nuno Torres & Oscar Afonso, 2008. "Re-evaluating the impact of natural resources on economic growth," FEP Working Papers 278, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:278
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    1. Sakari Lähdemäki & Eero Lehto & Eero Mäkynen, 2018. "The Role of Natural Resources and Geography for Productivity in Developed Countries," Working Papers 320, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    2. Alexandre Almeida & Aurora A.C. Teixeira, 2008. "One size does not fit all… An economic development perspective on the asymmetric impact of Patents on R&D," FEP Working Papers 292, Universidade do Porto, Faculdade de Economia do Porto.

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    More about this item

    Keywords

    Natural resources; Economic growth; Economywide Country Studies; Panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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