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Fickle Fossils. Economic Growth, Coal and the European Oil Invasion, 1900-2015

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  • Miriam Fritzsche
  • Nikolaus Wolf

Abstract

Fossil fuels have shaped the European economy since the industrial revolution. In this paper, we analyse the effect of coal and oil on long-run economic growth, exploiting variation at the level of European NUTS-2 and NUTS-3 regions over the last century. We show that an “oil invasion” in the early 1960s turned regional coal abundance from a blessing into a curse, using new detailed data on carboniferous strata as an instrument. Moreover, we show that human capital accumulation was the key mechanism behind this reversal of fortune. Not only did former coal regions fail to accumulate sufficient levels of human capital, but pre-industrial human capital helped declining regions to reinvent themselves. Without sufficient human capital, fossil fuels did never generate sustainable growth.

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  • Miriam Fritzsche & Nikolaus Wolf, 2022. "Fickle Fossils. Economic Growth, Coal and the European Oil Invasion, 1900-2015," Berlin School of Economics Discussion Papers 0003, Berlin School of Economics.
    • Handle: RePEc:bdp:dpaper:0003
    DOI: 10.48462/opus4-4652
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    More about this item

    Keywords

    Coal; Oil Invasion; Education; Reinvention; Economic Growth;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development

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