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Neoclassical growth and the natural resource curse puzzle

Guilló, Maria Dolores; Perez-Sebastian, Fidel; Dolores Guillo, Maria; Guilló, María Dolores; Pérez-Sebastián, Fidel

Authors

Maria Dolores Guilló

Fidel Perez-Sebastian

Maria Dolores Guillo

María Dolores Guilló

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.

Journal Article Type Article
Publication Date 2015-11
Journal Journal of international economics
Print ISSN 0022-1996
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 97
Issue 2
Pages 423-435
Institution Citation Guilló, M. D., & Pérez-Sebastián, F. (2015). Neoclassical growth and the natural resource curse puzzle. Journal of international economics, 97(2), (423-435). doi:10.1016/j.jinteco.2015.06.002. ISSN 0022-1996
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
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.

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