Neoclassical growth and the natural resource curse puzzle

Guilló, María Dolores; Pérez-Sebastián, Fidel

Abstract

We advance a novel mechanism that helps to explain the puzzling evidence on the natural resource curse. The new channel arises in a standard dynamic Heckscher-Ohlin model composed of small-open economies that take international output prices as given. Within this framework, a more capital-intensive primary sector implies that natural-resource abundant economies grow more slowly along the adjustment path. This effect might be only temporary because the natural input also affects long-run income, and not necessarily in the same direction as transitional growth. We produce quantitative results that show that the new mechanism can account for a significant fraction of the observed output growth gap between resource rich and resource poor U.S. states.

Citation

Guilló, M. D., & Pérez-Sebastián, F. (2015). Neoclassical growth and the natural resource curse puzzle. Journal of international economics, 97(2), 423-435. https://doi.org/10.1016/j.jinteco.2015.06.002

• Journal Article Type: Article
• Acceptance Date: Jun 21, 2015
• Online Publication Date: Jun 28, 2015
• Publication Date: 2015-11
• Deposit Date: Oct 27, 2015
• Publicly Available Date: Nov 23, 2017
• Journal: Journal of international economics
• Print ISSN: 0022-1996
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 97
• Issue: 2
• Pages: 423-435
• DOI: https://doi.org/10.1016/j.jinteco.2015.06.002
• Keywords: Natural resource curse; Economic growth; Dynamic Heckscher–Ohlin; Factor shares; Small open economy
• Public URL: https://hull-repository.worktribe.com/output/380343
• Publisher URL: http://www.sciencedirect.com/science/article/pii/S0022199615001130
• Additional Information: Authors' accepted manuscript of an article which has been published in: Journal of international economics, 2015, v.97, issue 2.
• Contract Date: Nov 23, 2017