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The shifting natural wealth of nations: The role of market orientation

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  • Arezki, Rabah
  • van der Ploeg, Frederick
  • Toscani, Frederik

Abstract

This paper explores the effect of market orientation on (known or available) natural resource wealth using a novel dataset of world-wide major hydrocarbon and mineral discoveries. Our empirical estimates based on a large panel of countries show that increased market orientation causes a significant increase in discoveries of natural resources. In a thought experiment where economies in Latin America and sub-Saharan Africa remain closed, they would have only achieved one quarter of the actual increase in discoveries they have experienced since the early 1990s. Our results call into question the commonly held view that known or available natural resource endowments are exogenous.

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  • Arezki, Rabah & van der Ploeg, Frederick & Toscani, Frederik, 2019. "The shifting natural wealth of nations: The role of market orientation," Journal of Development Economics, Elsevier, vol. 138(C), pages 228-245.
    • Handle: RePEc:eee:deveco:v:138:y:2019:i:c:p:228-245
    DOI: 10.1016/j.jdeveco.2018.12.002
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    3. Hamang, Jonas, 2024. "Economic development and known natural resource endowment: Discovery rate differentials of oil," Journal of Development Economics, Elsevier, vol. 170(C).
    4. Frederick van der Ploeg & Armon Rezai, 2020. "Stranded Assets in the Transition to a Carbon-Free Economy," Annual Review of Resource Economics, Annual Reviews, vol. 12(1), pages 281-298, October.
    5. Cust, James & Harding, Torfinn & Krings, Hanna & Rivera-Ballesteros, Alexis, 2023. "Public governance versus corporate governance: Evidence from oil drilling in forests," Journal of Development Economics, Elsevier, vol. 163(C).
    6. Brunnschweiler, Christa N. & Poelhekke, Steven, 2021. "Pushing one’s luck: Petroleum ownership and discoveries," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).
    7. Zuo, Na & Zhong, Hua, 2019. "The Effect of Resource Wealth on Regional Economic Development in China," 2019 Annual Meeting, July 21-23, Atlanta, Georgia 291114, Agricultural and Applied Economics Association.
    8. Pelzl, Paul & Poelhekke, Steven, 2021. "Good mine, bad mine: Natural resource heterogeneity and Dutch disease in Indonesia," Journal of International Economics, Elsevier, vol. 131(C).
    9. Chuku, Chuku & Lang, Lin & Lim, King Yoong, 2023. "Public debt, Chinese loans and optimal exploration–extraction in Africa," Energy Economics, Elsevier, vol. 118(C).
    10. Bergholt, Drago & Røisland, Øistein & Sveen, Tommy & Torvik, Ragnar, 2023. "Monetary policy when export revenues drop," Journal of International Money and Finance, Elsevier, vol. 137(C).
    11. Traviss Cassidy, 2019. "The Long-Run Effects of Oil Wealth on Development: Evidence from Petroleum Geology," The Economic Journal, Royal Economic Society, vol. 129(623), pages 2745-2778.
    12. Zuo, Na & Zhong, Hua, 2020. "Can resource policy reverse the resource curse? Evidence from China," Resources Policy, Elsevier, vol. 68(C).
    13. Perez-Sebastian, Fidel & Raveh, Ohad & van der Ploeg, Frederick, 2021. "Oil discoveries and protectionism: Role of news effects," Journal of Environmental Economics and Management, Elsevier, vol. 107(C).
    14. van der Ploeg, Frederick, 2020. "Race to burn the last ton of carbon and the risk of stranded assets," European Journal of Political Economy, Elsevier, vol. 64(C).
    15. van der Ploeg, Frederick & Rezai, Armon, 2020. "The risk of policy tipping and stranded carbon assets," Journal of Environmental Economics and Management, Elsevier, vol. 100(C).
    16. Le Clech, Néstor A., 2024. "Policy market orientation, property rights, and corruption effects on the rent of non-renewable resources in Latin America and the Caribbean," Resources Policy, Elsevier, vol. 91(C).
    17. Rick Van der Ploeg & Armon Rezai, 2018. "Climate Policy and Stranded Carbon Assets: A Financial Perspective," OxCarre Working Papers 206, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    18. Lassi Ahlvik & Jørgen Juel Andersen & Jonas Hveding Hamang & Torfinn Harding, 2022. "Quantifying supply-side climate policies," Working Papers No 01/2022, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    19. Jonas Hveding Hamang, 2022. "Local economic development and oil discoveries," Working Papers No 03/2022, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    20. Graham A. Davis, 2020. "Large-sample evidence of income inequality in resource-rich nations," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 33(1), pages 193-216, July.
    21. Cassidy, Traviss, 2017. "Revenue Persistence and Public Service Delivery," MPRA Paper 114464, University Library of Munich, Germany, revised 06 Sep 2022.
    22. Adrien Desroziers & Yassine Kirat & Arsham Reisinezhad, 2023. "Carbon curse: As you extract, so you will burn," Working Papers 2023.09, FAERE - French Association of Environmental and Resource Economists.
    23. Cassidy, Traviss, 2017. "How Forward-Looking Are Local Governments? Evidence from Indonesia," MPRA Paper 97776, University Library of Munich, Germany, revised 01 Jun 2019.
    24. Mihalyi,David & Scurfield,Thomas, 2020. "How Did Africa's Prospective Petroleum Producers Fall Victim to the Presource Curse ?," Policy Research Working Paper Series 9384, The World Bank.
    25. Mihalyi, David, 2020. "The Long Road to First Oil," MPRA Paper 103725, University Library of Munich, Germany.

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    More about this item

    Keywords

    Natural resources; Discoveries; Market orientation; Liberalization; Institutions; Endogenous reserves;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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