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Natural Resource Abundance and Economic Growth

Sachs, Jeffrey D.; Warner, Andrew M.

One of the surprising features of modern economic growth is that economies with abundant natural resources have tended to grow less rapidly than natural-resource-scarce economies. In this paper we show that economies with a high ratio of natural resource exports to GDP in 1971 (the base year) tended have low growth rates during the subsequent period 1971-89. This negative relationship holds true even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates, and other variables. We explore the possible pathways for this negative relationship by studying the cross-country effects of resource endowments on trade policy, bureaucratic efficiency, and other determinants of growth. We also provide a simple theoretical model of endogenous growth that might help to explain the observed negative relationship.

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More About This Work

Academic Units
Earth Institute
Publisher
Harvard Institute for International Development
Series
Development Discussion Paper, 517a
Published Here
September 25, 2009

Notes

Subsequently NBER Working Paper No. 5398, December 1995.

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