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The “Curse of Resources” Revisited: A Different Story from China

Ying Fang (), Li Qi and Yang Zhao
Authors registered in the RePEc Author Service: Li Qi () and Qi Li

No 2013-10-14, Working Papers from Wang Yanan Institute for Studies in Economics (WISE), Xiamen University

Abstract: Whether natural resources boost or deter economic development remains an open question in the literature. Papyrakis and Gerlagh (2007) found a significant negative association between economic growth and resource abundance at a U.S.-state level. They demonstrated that resource abundance crowds out human capital accumulation and R&D investment. This paper performs an empirical analysis on data from 95 cities in China from 1997 to 2005 and finds no obvious evidence of a significant relationship between natural resources and economic development at the city level. By controlling province dummy variables, however, it becomes clear that resource abundance in one city imposes a significant positive “spill-over” effect on the other cities within the same province. Moreover, an analysis on transmission channels of such spill-over effects reveals that resource abundance boosts the manufacturing industry in the other cities, which is consistent with the “big push” theory.

Keywords: Curse of resources; Spill-over effects; Big push (search for similar items in EconPapers)
JEL-codes: O13 O18 (search for similar items in EconPapers)
Date: 2013-10-14
New Economics Papers: this item is included in nep-ene, nep-gro and nep-tra
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