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Natural Resources and Economic Growth: The Role of Investment

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  • Thorvaldur Gylfason
  • Gylfi Zoega

Abstract

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.

Suggested Citation

  • Thorvaldur Gylfason & Gylfi Zoega, 2006. "Natural Resources and Economic Growth: The Role of Investment," The World Economy, Wiley Blackwell, vol. 29(8), pages 1091-1115, August.
    • Handle: RePEc:bla:worlde:v:29:y:2006:i:8:p:1091-1115
    DOI: 10.1111/j.1467-9701.2006.00807.x
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    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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