RESOURCE DEPLETION AND SUSTAINABILITY IN SMALL OPEN ECONOMIES

Jeffery Vincent, Theodore Panayotou and John Hartwick

No 294389, Harvard Institute for International Development (HIID) Papers from Harvard University, Kennedy School of Government

Abstract: Exogenous price changes affect the amount that a small country exporting natural resource commodities must invest to sustain its consumption level. The necessary amount is given by the difference between Hotelling rent and the discounted sum of future terms-of-trade effects. The latter term is found to be large relative to the former in the case of petroleum depletion in Indonesia. This suggests that resource-rich countries will need to invest more than previously expected to sustain their consumption levels, if natural resource prices continue their long-term historical decline.

Keywords: International Relations/Trade; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 33
Date: 1997-03
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Persistent link: https://EconPapers.repec.org/RePEc:ags:hariid:294389

DOI: 10.22004/ag.econ.294389

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