Natural Resources, Innovation, and Growth

Elissaios Papyrakis
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Elissaios Papyrakis: IVM/VU Institute for Environmental Studies, Vrije Universiteit

No 2004.129, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper investigates the connection between resource abundance and innovation, as a transmission mechanism that can elucidate part of the resource curse hypothesis; i.e. the observed negative impact of resource wealth on income growth. We develop a variation of the Ramsey-Cass-Koopmans model with endogenous growth to explain the phenomenon. In this model, consumers trade off leisure versus consumption, and firms trade off innovation efforts versus manufacturing. For this model, we show that an increase in resource income frustrates economic growth in two ways: directly by reducing work effort and indirectly by inducing a smaller proportion of the labor force to engage in innovation.

Keywords: Natural resources; Growth; Innovation (search for similar items in EconPapers)
JEL-codes: O13 O31 Q33 (search for similar items in EconPapers)
Date: 2004-10
New Economics Papers: this item is included in nep-dev and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2004.129

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