Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
3Activity
0 of .
Results for:
No results containing your search query
P. 1
Natural Resource Curse

Natural Resource Curse

Ratings: (0)|Views: 219|Likes:
Published by hishamsauk

More info:

Published by: hishamsauk on May 07, 2011
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PPT, PDF, TXT or read online from Scribd
See more
See less

04/30/2013

pdf

text

original

 
D
EVELOPMENT
E
CONOMICS
 
N
ATURAL
R
ESOURCE
C
URSE
As we have already discussed,
Geography impacts on economic performance both directly and viainstitutions.
Ho
wever, a striking result is n
o
ted bySachs and Warner (2001):
countrieswith abundant natural resources tendto grow slower than other countries,even after controlling for volatility incommodity prices.
Why c
o
uld this be? There are a number
of 
p
o
ssible reas
o
ns
fo
r such anass
o
ciati
o
n bey
o
nd the a
fo
rementi
o
nede
ff 
ects
o
n inc
o
me levels. Frankel (2010)lists them as:
P
rebisch thesis
(primary pr
o
ducehas a
alling terms
of 
trade).
P
rimary commodity prices tend tobe highly volatile
.
D
utch
D
isease
.
M
acroeconomic Instability.
Crowding out manufactures
.
H
igher risk of conflict.
Natural resources foster inequality
;
 the elite are likely unwilling t
o
ad
o
ptp
o
licies that pr
o
m
o
te gr
o
wth due t
o
 the h
o
ld up pr
o
blem discussed pri
o
r.
N
o
te that
o
ne can discern between tw
o
 types
of 
Natural Res
o
urce. Isham et al(2005)n
o
te that it isp
o
intres
o
urcesthat are negatively ass
o
ciated withec
o
n
o
mic gr
o
wth:
P
o
intres
o
urces are
spatially concentrated and easily appropriable
(minerals,
o
il), Di
ff 
useres
o
urcesare agricultural.
The spatial c
o
ncentrati
o
n
of 
p
o
intres
o
urces means that they arerelatively easy t
o
guard and all
o
cate.
 
N
ATURAL
R
ESOURCE
C
URSE
P
rebisch Thesis:
B
ecause the
orld demand for primary produce is income inelastic
(deriving
r
o
mEngels law), the terms
of 
trade (price
of 
exp
o
rts/price
of 
imp
o
rts) will be
o
n anegative trend.
Thus, primary c
o
mm
o
dity specializati
o
n is n
o
t
easible.
The
o
retical critiques c
o
me in tw
o
 
lav
o
urs:
H
otelling:
The
 price of a point resource rises with the interest rate
(due t
o
the trade
off 
between its price in the gr
o
und, and the interest y
o
u can earn
r
o
m investingthe revenue p
o
st-extracti
o
n).
M
althus:
ixed supply of resources and a rising demand due to population growthincreases prices due to increasing scarcity.
Empirically, neither side
of 
the argument gets much empirical supp
o
rt
;
Frankel(2010)n
o
tes that studies tend t
o
be highly sensitive t
o
the end date:
In net, b
o
th sides ign
o
re that
demand and technological innovation
act wheneverprices are driven up (c
o
nsumers bec
o
me m
o
re ec
o
-
riendly, entrepreneurs enter themarket as a resp
o
nse t
o
higher prices).
Prebisch thesis is unlikely t
o
be the cause
of 
the natural res
o
urce curse.

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->