Natural Resources and Economic Growth: What is the Connection?

By Thorvaldur Gylfason. Social Science Research Network, 2001

128 citations recorded by the source corpus.

This paper reviews the relationship between natural resources and economic growth, and stresses how natural capital tends to crowd out foreign capital, social capital, human capital, and physical capital, thereby impeding economic growth across countries and presumably also over time. Specifically, the paper presents empirical evidence that nations with abundant natural capital tend to have (a) less trade and foreign investment, (b) more corruption, (c) less education, and (d) less domestic investment than other nations that are less well endowed with, or less dependent on, natural resources. This matters for growth because empirical evidence also indicates that trade, honesty, education, and investment are all positively and significantly related to economic growth across countries.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/11791fd73bbb1b636b0d99e0f525b1b46cb2b4ea

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. E. Dietsche
2. C. Leonard
3. P. Stevens
4. Balázs Égert
5. Alessio Ciarlone

Citations in the corpus

• Capital Controls and Foreign Direct Investment (2004, unknown): “In this literature, one of the channels by which resource abundance impedes growth is that it crowds out foreign investment (Gylfason, 2001; Papyrakis & Gerlagh, 2003).”
• Equilibrium Exchange Rates in Transition Economies: Taking Stock of the Issues (2006, unknown): “Gylfason (2002) argues that abundant natural resources may lead to sluggish long-term growth because of (1) ill-defined property rights, imperfect or missing markets and lax legal structures in many developing countries and emerging market economies; (2) the fight for resource rents and the…”
• Fear of China: Is there a Future for Manufacturing in Latin America? (2004, unknown): “Gylfason (2001) Gylfason and Zoega (2002), in turn, look at other channels and their results point to a negative impact of natural resource rents on investment in physical and human capital, which are key determinants of growth.”
• Resource curse: An analysis of causes, experiences and possible ways forward (2007, background): “A range of cross-country statistical work has confirmed this proposition (Atkinson and Hamilton, 2003; Dietz et al., 2006; Gylfason, 2001; Korhonen, 2004; Leite and Weidmann, 2002; Mehlum et al., 2002; Papyrakis and Gerlagh, 2004; Robinson et al., 2003; Sala-i-Martin and Subramanian, 2003).”
• Dutch Disease Scare in Kazakhstan: Is it real? (2008, background): “…imperfect or missing markets and lax legal structures, (2) if the fight for resource rents and the concentration of economic and political power hampers democracy and growth, and finally (3) if too many people get stuck in low-skill intensive natural resource-based industries (Gylfason, 2001).”