Can fossil fuel endowments steer economic development? Evidence from the linkages approach

Francisco Ebeling

Resources Policy, 2022, vol. 78, issue C

Abstract: The economic and political literature is not conclusive about whether large natural resource endowments diminish growth and development prospects, about the diverse political, economic, and institutional causal mechanisms that lead to Resource Curse and Dutch Disease phenomena, and about the most suitable and effective counteracting measures against these problems. This article adds further evidence to the debate through the linkages approach, primarily associated with Albert Hirschman. By calculating Rasmussen-Hirschman linkages for 42 countries from the WIOD database for 2000–2014, which are subdivided into two groups of countries - one with above and another with below OECD average fuel exports, it suggests that there is a larger likelihood that countries that export fewer fossil fuels to experience higher growth in their manufacturing sector linkages. However, because these two groups are not homogeneous in their relationship between GDP per Capita growth, the size of their linkages, and the growth of the size of their manufacturing value-added in their GDPs, a panel data econometric exercise further subdivides the two country groups in above and below-average GDP per capita. It regresses the manufacturing sector’s backward and linkages with selected variables. The econometric exercise presents evidence that countries with higher GDP per capita and that export more fuels than the OECD average have a larger probability of success than countries with above-average fossil fuels exports and below OECD average GDP per capita. This shows that natural resource exploitation and fuel exports are more likely to be a curse in countries that have not reached a certain threshold of institutional quality, physical and intangible capital accumulation, making it more difficult for them to reap the fruits of natural resource exploitation fully.

Keywords: Rasmussen-hirschman indexes; Backward linkages; Forward linkages; Panel data econometrics; Manufacturing; Deindustrialization (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301420722003439
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:78:y:2022:i:c:s0301420722003439

DOI: 10.1016/j.resourpol.2022.102898

Access Statistics for this article

Resources Policy is currently edited by R. G. Eggert

More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().