Natural Resource Abundance and Economic Growth

Jeffrey D. Sachs and Andrew Warner

No 5398, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: One of the surprising features of modern economic growth is that economies with abundant natural resources have tended to grow less rapidly than natural-resource-scarce economies. In this paper we show that economies with a high ratio of natural resource exports to GDP in 1971 (the base year) tended to have low growth rates during the subsequent period 1971-89. This negative relationship holds true even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates, and other variables. We explore the possible pathways for this negative relationship by studying the cross-country effects of resource endowments on trade policy, bureaucratic efficiency, and other determinants of growth. We also provide a simple theoretical model of endogenous growth that might help to explain the observed negative relationship.

JEL-codes: O40 Q32 (search for similar items in EconPapers)
Date: 1995-12
Note: EFG IFM EEE
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Citations: View citations in EconPapers (1864)

Published as Sachs, Jeffrey D. and Andrew M. Warner. "The Big Rush, Natural Resource Booms And Growth," Journal of Development Economics, 1999, v59(1,Jun), 43-76.
Published as Leading Issues in Economic Development, Oxford University Press, 2000.

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Working Paper: Natural Resource Abundance and Economic Growth (1995)
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