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The capital gains from trade are not enough: Evidence from the environmental accounts of Venezuela and Mexico

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  • M. del Mar Rubio

Abstract

In principle, a country can not endure negative genuine savings for long periods of time without experiencing declining consumption. Nevertheless, theoreticians envisage two alternatives to explain how an exporter of non-renewable natural resources could experience permanent negative genuine savings and still ensure sustainability. The first one alleges that the capital gains arising from the expected improvement in the terms of trade would suffice to compensate for the negative savings of the resource exporter. The second alternative points at technological change as a way to avoid economic collapse. This paper uses the data of Venezuela and Mexico to empirically test the first of these two hypotheses. The results presented here prove that the terms of trade do not suffice to compensate the depletion of oil reserves in these two open economies.

Suggested Citation

  • M. del Mar Rubio, 2003. "The capital gains from trade are not enough: Evidence from the environmental accounts of Venezuela and Mexico," Economics Working Papers 689, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:689
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    Citations

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    Cited by:

    1. Louis Dupuy & Matthew Agarwala, 2014. "International trade and sustainable development," Chapters,in: Handbook of Sustainable Development, chapter 25, pages 399-417 Edward Elgar Publishing.
    2. Matthias Blum & Cristián Ducoing & Eoin McLaughlin, 2016. "Genuine Savings in developing and developed countries, 1900-2000," Discussion Papers in Environment and Development Economics 2016-15, University of St. Andrews, School of Geography and Sustainable Development.
    3. repec:laf:wpaper:201201 is not listed on IDEAS
    4. Louis Dupuy, 2012. "International Trade and Sustainability : A survey," Working Papers hal-00701426, HAL.
    5. M. del Mar Rubio Varas, 2005. "Value and depreciation of mineral resources over the very long run: An empirical contrast of different methods," Economics Working Papers 867, Department of Economics and Business, Universitat Pompeu Fabra.

    More about this item

    Keywords

    Exhaustive resources; environmental accounts; net national product; genuine savings; foreign trade;

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
    • P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • F18 - International Economics - - Trade - - - Trade and Environment

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