Natural Resource Abundance and Economic Growth

TLDR

The study investigates whether natural resource abundance, holding other factors constant, slows economic growth. The authors estimate a series of models—starting with a one‑equation specification, then a two‑equation, and finally a three‑equation model—using World Bank capital stock data to separate resource dependence from resource endowment effects. The results show that resource dependence negatively affects growth, while resource endowment has a positive but diminishing impact that ultimately vanishes in the three‑equation specification.

Abstract

This paper explores whether natural resource abundance leads, other things equal, to slower growth rates. We distinguish between natural resource dependence (RD) and the natural resource endowment (RE). We estimate three models, using World Bank data on national capital stocks. In a one-equation model we show that RD has a negative effect on growth rates, apparently confirming the main results of the resource "curse" literature. RE, however, has a positive impact on growth. We then estimate a two-equation model, in which the impacts of RE are much weaker. Finally, we estimate a three-equation model, in which the impacts of natural resources on growth disappears.