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The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth

Lant Pritchett (), Michael Woolcock (), Gwen Busby and Jonathan Isham ()

Middlebury College Working Paper Series from Middlebury College, Department of Economics

Abstract: Many oil, mineral, and plantation crop-based economies experienced a substantial deceleration of growth since the commodity boom and bust of the 1970s and early 1980s. Rodrik (1999) has demonstrated that the magnitude of a country's growth deceleration since the 1970s is a function of both the magnitude of the shocks and a country's "social capability" for adapting to shocks. In this paper, we demonstrate that in this respect countries, with what we term "point source" natural resource exports are doubly disadvantaged. Not only are countries with these types of exports exposed to terms of trade shocks, but the institutional capability for responding to shocks is itself endogenous and negatively related to export composition. Using two different sources of export data and classifications of export composition, we show that point source and coffee/cocoa exporting countries do worse across an array of governance indicators (controlling for a wide array of other potential determinants of governance). This is not just a function of being a "natural resource" exporter, as countries with natural resource exports that are "diffuse" do not show the same strong differences-and have had more robust growth recoveries.

Keywords: economic growth; institutions; natural resource endowment (search for similar items in EconPapers)
JEL-codes: O13 O50 Z13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-tra
Date: 2004-06
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