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Resource abundance: A curse or blessing?

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  • Victor Polterovich, Vladimir Popov, Alexander Tonis

Abstract

Is resource abundance a blessing or a curse? Typically, in resource rich countries, domestic fuel prices are lower, and energy intensity of GDP is higher. But they have higher investment in R&D and fixed capital stock, larger foreign exchange reserves and more inflows of FDI. They also have lower budget deficits and lower inflation. These are conducive for long term growth. We also find that in resource rich countries, real exchange rate is generally higher, accumulation of human capital is slower and institutions are worse, especially if they were not strong initially, which are detrimental for growth.

Suggested Citation

  • Victor Polterovich, Vladimir Popov, Alexander Tonis, 2010. "Resource abundance: A curse or blessing?," Working Papers 93, United Nations, Department of Economics and Social Affairs.
    • Handle: RePEc:une:wpaper:93
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    Cited by:

    1. Mironov, Valeriy V. & Petronevich, Anna V., 2015. "Discovering the signs of Dutch disease in Russia," Resources Policy, Elsevier, vol. 46(P2), pages 97-112.
    2. Boris Petkov, 2018. "Natural Resource Abundance: Is it a Blessing or is it a Curse," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 43(3), pages 25-56, September.
    3. Eberechukwu Uneze & Adedeji Adeniran, 2014. "Exploring Domestic Financing Options for Post-2015 Development Agenda in Selected Sub-Saharan African Countries," Southern Voice Occasional Paper 18, Southern Voice.
    4. Abdul HANNAN* & Hasan M. MOHSIN**, 2015. "Regional Analysis of Resource Curse Hypothesis: Evidence from Panel Data," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 25(1), pages 45-66.
    5. Andreas Chai, 2018. "Household consumption patterns and the sectoral composition of growing economies: A review of the interlinkages," Discussion Papers in Economics economics:201802, Griffith University, Department of Accounting, Finance and Economics.
    6. Rashid Khan, Haroon Ur & Zaman, Khalid & Usman, Bushra & Nassani, Abdelmohsen A. & Aldakhil, Abdullah Mohammed & Qazi Abro, Muhammad Moinuddin, 2019. "Financial management of natural resource market: Long-run and inter-temporal (forecast) relationship," Resources Policy, Elsevier, vol. 63(C), pages 1-1.
    7. Popov, Vladimir, 2019. "Successes and failures of industrial policy: Lessons from transition (post-communist) economies of Europe and Asia," MPRA Paper 95332, University Library of Munich, Germany.
    8. Oyarzo, Mauricio & Paredes, Dusan, 2021. "The impact of mining taxes on public education: Evidence for mining municipalities in Chile," Resources Policy, Elsevier, vol. 70(C).
    9. Utku Teksoz & Katerina Kalcheva, 2016. "Institutional differences across resource-based economies," WIDER Working Paper Series wp-2016-63, World Institute for Development Economic Research (UNU-WIDER).
    10. Yang, Jinxuan & Rizvi, Syed Kumail Abbas & Tan, Zhixiong & Umar, Muhammad & Koondhar, Mansoor Ahmed, 2021. "The competing role of natural gas and oil as fossil fuel and the non-linear dynamics of resource curse in Russia," Resources Policy, Elsevier, vol. 72(C).
    11. Jonathan Mukiza Peter Kansheba & Mutaju Isack Marobhe, 2022. "Institutional quality and resource-based economic sustainability: the mediation effects of resource governance," SN Business & Economics, Springer, vol. 2(2), pages 1-24, February.
    12. Alshammari, Ahmad Alrazni & Alhabshi, Syed Musa & Saiti, Buerhan, 2019. "The impact of oil prices and the financial market on cost efficiency in the insurance and Takaful sectors: Evidence from a stochastic frontier analysis," Economic Systems, Elsevier, vol. 43(3).
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    14. Priscila MÉNDEZ & Sheila GUARNIZO & Rafael ALVARADO, 2019. "Nexo Causal Entre La Urbanización Y La Producción Regional: Evidencia Para Ecuador Usando Vi En Econometría Espacial," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 19(1), pages 63-76.
    15. Rey-Martí, Andrea & Valencia-Toledo, Alfredo & Chaparro-Banegas, Nuria & Mas-Tur, Alicia & Roig-Tierno, Norat, 2023. "Developing models to assess the social impact of mining: An exploratory study trough necessary conditions analysis (NCA)," Resources Policy, Elsevier, vol. 83(C).
    16. Sanderson, Abel & Thomas, Lusiyano & Tafirenyika, Mafugu, 2021. "Factors affecting gold production in Zimbabwe (1980–2018)," Resources Policy, Elsevier, vol. 73(C).
    17. María Angélica Arbeláez & Valentina Parra, 2020. "Industrias extractivas," Informes de Investigación 18648, Fedesarrollo.
    18. Robson Mandishekwa, 2021. "Rethinking mining as a development panacea: an analytical review," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 34(1), pages 151-162, April.
    19. Saeed Moshiri & Sara Hayati, 2017. "Natural Resources, Institutions Quality, and Economic Growth; A Cross-Country Analysis," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(3), pages 661-693, Summer.
    20. Polyzos, Efstathios & Kuck, Simon & Abdulrahman, Khadija, 2022. "Demographic change and economic growth: The role of natural resources in the MENA region," Research in Economics, Elsevier, vol. 76(1), pages 1-13.
    21. Yulia Vymyatnina, 2014. "Spillover Effects in the Customs Union of Russia, Kazakhstan and Belarus," EcoMod2014 7160, EcoMod.
    22. Roberto Dell’Anno & Majid Maddah, 2022. "Natural resources, rent seeking and economic development. An analysis of the resource curse hypothesis for Iran," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 15(1), pages 47-65, January.
    23. Sini, Snow & Abdul-Rahim, A.S. & Sulaiman, Chindo, 2021. "Does natural resource influence conflict in Africa? Evidence from panel nonlinear relationship," Resources Policy, Elsevier, vol. 74(C).
    24. Utku Teksoz & Katerina Kalcheva, 2016. "Institutional differences across resource-based economies," WIDER Working Paper Series 063, World Institute for Development Economic Research (UNU-WIDER).
    25. Arvanitis, Yannis & Weigert, Maxime, 2017. "Turning resource curse into development dividends in Guinea-Bissau," Resources Policy, Elsevier, vol. 53(C), pages 226-237.

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    More about this item

    Keywords

    Resource curse; economic growth; inequality; institutions; real exchange rate; budget deficit; inflation; investment; industrial policy;
    All these keywords.

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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