Resource Curse or Debt Overhang?

Osmel Manzano Mazzali and Roberto Rigobon

No 8390, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: It has been widely believed that resource abundant economies grow less than other economies. In a very influential paper, Sachs and Warner (1997), point out that there is a negative relationship between resource abundance and growth. Two important econometric problems are present in the traditional empirical literature: First, the result might depend on factors that are correlated with primary exports but that have been excluded from the regression. Second, total GDP includes the production in the resource sector that has been declining in the last 30 years. We correct for those issues. Our results indicate that the so called 'Natural Resource Curse' might be related to a debt overhang. In the 70's when commodities' prices were high, natural resource abundant countries used them as collateral for debt. The 80's witnessed an important fall in the prices that drove these countries to debt crises. When we estimate the model taking these into account, we found that the effect of resource abundance disappears.

JEL-codes: O4 (search for similar items in EconPapers)
Date: 2001-07
New Economics Papers: this item is included in nep-dev and nep-ene
Note: EFG IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (161)

Published as Lederman, Daniel and William F. Maloney (eds.) Natural Resources and Development: Are They a Curse? Are They Destiny? Stanford University Press, 2003.

Downloads: (external link)
http://www.nber.org/papers/w8390.pdf (application/pdf)

Related works:
Book: Natural Resources: Neither Curse nor Destiny (2011-12)
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:nbr:nberwo:8390

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w8390

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().