Working Papers in full text
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
All
Other research-related activities and publications of the IMF can be found at IMF Research
|
Free Email Notification
Receive emails when we post new
items of interest to you.
Subscribe or
Modify your profile
|
|
|
|
Can the Natural Resource Curse Be Turned Into a Blessing? The Role of Trade Policies and Institutions
|
Author/Editor: |
Arezki, Rabah | Ploeg, Frederik van der |
| Authorized for Distribution: |
March 1, 2007 |
|
Electronic Access: |
Free Full Text (PDF file size is 516KB)
Use the free Adobe Acrobat Reader to view this PDF file.
|
|
|
|
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
|
|
Summary: We criticize existing empirical results on the detrimental effects of natural resource dependence on the rate of economic growth after controlling for institutional quality, openness, and initial income. These results do not survive once we use instrumental variables techniques to correct for the endogenous nature of the explanatory variables. Furthermore, they suffer from omitted variables bias as they overestimate the effect of initial income per capita and thus underestimate the speed of conditional convergence. Instead, we provide new evidence for the impact of natural resource dependence on income per capita in a systematic empirical cross-country framework. In addition to a significant negative direct impact of natural resources on income per capita, we find a significant indirect effect of natural resources on institutions. We allow for interaction effects and provide evidence that the natural resource curse is particularly severe for economic performance in countries with a low degree of trade openness. Adopting policies directed toward more trade openness may thus soften the impact of a resource curse. We also check the robustness of our results by using a variety of instruments and also employing the ratio of natural capital rather than natural resource exports to national income as an explanatory variable. We find evidence that resource abundance, measured by the stock of natural capital, also induces a resource curse, but less severely for countries that are relatively open.
|
|
|
|
Order a print copy
|
|
Series: |
Working Paper No. 07/55 |
|
Subject(s): |
Capital | Income | Economic growth | Trade policy |
|
Author's keyword(s): |
Resource curse
| institutions
| trade policies
| growth performance
| income per capita
|
|
|
|
|
| |
Published: |
|
March 1, 2007 |
|
|
|
|
| |
ISBN/ISSN: |
|
1934-7073 |
|
Format: |
|
Paper |
| |
Stock No: |
|
WPIEA2007055 |
|
Pages: |
|
34 |
| |
Price: |
|
US$18.00 (Academic Rate: US$18.00 )
|
|
|
|
|
|
|
