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The “Curse of Resources” Revisited: A Different Story from China

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  • Ying Fang
  • Li Qi
  • Yang Zhao

Abstract

Whether natural resources boost or deter economic development remains an open question in the literature. Papyrakis and Gerlagh (2007) found a significant negative association between economic growth and resource abundance at a U.S.-state level. They demonstrated that resource abundance crowds out human capital accumulation and R&D investment. This paper performs an empirical analysis on data from 95 cities in China from 1997 to 2005 and finds no obvious evidence of a significant relationship between natural resources and economic development at the city level. By controlling province dummy variables, however, it becomes clear that resource abundance in one city imposes a significant positive “spill-over” effect on the other cities within the same province. Moreover, an analysis on transmission channels of such spill-over effects reveals that resource abundance boosts the manufacturing industry in the other cities, which is consistent with the “big push” theory.

Suggested Citation

  • Ying Fang & Li Qi & Yang Zhao, 2013. "The “Curse of Resources” Revisited: A Different Story from China," Working Papers 2013-10-14, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    • Handle: RePEc:wyi:wpaper:002007
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    File URL: https://econpub.xmu.edu.cn/research/repec/upload/2009915154527055475115776.pdf
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    References listed on IDEAS

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    1. Joshua D. Angrist & Adriana D. Kugler, 2008. "Rural Windfall or a New Resource Curse? Coca, Income, and Civil Conflict in Colombia," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 191-215, May.
    2. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
    3. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
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    6. Tobias Kronenberg, 2004. "The curse of natural resources in the transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(3), pages 399-426, September.
    7. Stijns, Jean-Philippe C., 2005. "Natural resource abundance and economic growth revisited," Resources Policy, Elsevier, vol. 30(2), pages 107-130, June.
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    Cited by:

    1. Alexeev, Michael & Chernyavskiy, Andrey, 2015. "Taxation of natural resources and economic growth in Russia's regions," Economic Systems, Elsevier, vol. 39(2), pages 317-338.
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    3. Michael Alexeev & Yao-Yu Chih, 2017. "Oil Price Shocks and Economic Growth in the Us," CAEPR Working Papers 2017-011, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    4. Olga Gennadyevna Vasilyeva, 2018. "Natural Resources: How to Measure Them in ‘Resource Curse’ Studies," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 4, pages 67-91.

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    More about this item

    Keywords

    Curse of resources; Spill-over effects; Big push;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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