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Natural Resource Abundance and Human Capital Accumulation

  • Jean-Philippe C. Stijns

    (University of California at Berkeley)

This study examines indicators of human capital accumulation together with data for natural resource abundance and rents in a panel of 102 countries running from 1970 to 1999. Mineral wealth makes a positive and marked difference on human capital accumulation. Matching on observables reveals that cross-country results are not driven by a third factor such as overall economic development. Political stability does seem to affect both human capital accumulation and subsoil wealth, but not enough to overturn my conclusions. Instrumentation reveals that reverse causality running from education to natural resources does not drive the results. Estimation of a panel VAR indicates that, over the three decades, a $1 shock to resource rent generates five cents of extra educational expenditure per year. These results are consistent with Hirschman’s conjecture that enclave economies have weaker production leakages but stronger government revenue linkages than other activities. The “wealth channel” identified in this paper implies that caution should be exerted when discouraging countries from exploiting their mineral wealth, especially for countries where human capital is scarce.

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File URL: http://econwpa.repec.org/eps/dev/papers/0112/0112001.pdf
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Paper provided by EconWPA in its series Development and Comp Systems with number 0112001.

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Length: 36 pages
Date of creation: 20 Dec 2001
Date of revision:
Handle: RePEc:wpa:wuwpdc:0112001
Note: Type of Document - Adobe PDF 1.3; prepared on IBM PC; to print on HP/PostScript; pages: 36 ; figures: included . Draft - Comments and suggestions most welcome.
Contact details of provider: Web page: http://econwpa.repec.org

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