Resource Abundance: A Curse or Blessing?
DESA Working Paper No. 93
27 Pages Posted: 20 Apr 2011
Date Written: June 2010
Abstract
Is resource abundance a blessing or a curse? Typically, in resource rich countries, domestic fuel prices are lower, and energy intensity of GDP is higher. But they have higher investment in R&D and fixed capital stock, larger foreign exchange reserves and more inflows of FDI. They also have lower budget deficits and lower inflation. These are conducive for long term growth. We also find that in resource rich countries, real exchange rate is generally higher, accumulation of human capital is slower and institutions are worse, especially if they were not strong initially, which are detrimental for growth.
Keywords: Resource Curse, Economic Growth, Inequality, Institutions, Real Exchange Rate, Budget
JEL Classification: O25, O43, Q32, Q43, Q48
Suggested Citation: Suggested Citation