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Resource abundance: A curse or blessing?

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  • Victor Polterovich, Vladimir Popov, Alexander Tonis

Abstract

Is resource abundance a blessing or a curse? Typically, in resource rich countries, domestic fuel prices are lower, and energy intensity of GDP is higher. But they have higher investment in R&D and fixed capital stock, larger foreign exchange reserves and more inflows of FDI. They also have lower budget deficits and lower inflation. These are conducive for long term growth. We also find that in resource rich countries, real exchange rate is generally higher, accumulation of human capital is slower and institutions are worse, especially if they were not strong initially, which are detrimental for growth.

Suggested Citation

  • Victor Polterovich, Vladimir Popov, Alexander Tonis, 2010. "Resource abundance: A curse or blessing?," Working Papers 93, United Nations, Department of Economics and Social Affairs.
    • Handle: RePEc:une:wpaper:93
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    File URL: http://www.un.org/esa/desa/papers/2010/wp93_2010.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Resource curse; economic growth; inequality; institutions; real exchange rate; budget deficit; inflation; investment; industrial policy;
    All these keywords.

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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