Is it possible that excessive reliance on natural resources affects saving and investment in a way that retards economic growth? - and thus, in the long run, the level of output per capita. This paper reviews the literature, explores the data and compares and contrasts the explanatory power and interplay of natural resources and civil liberties, our proxy for institutional variables currently under scrutiny in the literature. We propose that natural resource dependence may be viewed as an exogenous factor that impedes economic growth and investment as well as institutions, even if we stress that natural resource abundance may be good for growth. Copyright 2006 The Authors Journal compilation 2006 Blackwell Publishing Ltd.
This paper diagnoses the symptoms of the Dutch disease in a two-sector
stochastic endogenous growth model. A productive, low-skill-intensive
primary sector causes the currency to appreciate in real terms, thus
hampering the development of a high-skill-intensive secondary sector and
thereby reducing growth. Moreover, the volatility of the primary sector
generates real-exchange-rate uncertainty and may thus reduce investment and
learning in the secondary sector and hence also growth. Cross-sectional and
panel regressions based on data for 125 countries in the period 1960–1992
confirm a statistically significant inverse relationship between the size of
the primary sector and economic growth, but not between the volatility of
the real exchange rate and growth.
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