Terms of Trade and Growth of Resource Economies: A Tale of Two Countries

Augustin Fosu ()

No wp-2011-028, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: The current paper demonstrates a dichotomy of the growth response to changes in the barter terms of trade, employing as case studies the two African countries, Botswana and Nigeria. Using distributed-lag analysis, the paper finds that the effect of terms of trade on output is positive and negative for the two countries, respectively. I interpret these results as supportive of the 'resource curse' hypothesis for Nigeria, but not for Botswana. I further argue that the superior institutional quality in Botswana, relative to Nigeria, is likely responsible for the contrasting results.

Keywords: Economic development; Institutional economics; International trade; Natural resources; Trade regulation (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (10)

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Working Paper: Terms of Trade and Growth of Resource Economies: A Tale of Two Countries (2011)
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