Resource Abundance: A Curse or Blessing?

DESA Working Paper No. 93

27 Pages Posted: 20 Apr 2011

See all articles by Victor Polterovich

Victor Polterovich

Russian Academy of Sciences (RAS) - Laboratory "Mathematical Economics"

Vladimir Popov

Central Economics and Mathematics Institute (CEMI); New Economic School (NES)

Alexander Tonis

affiliation not provided to SSRN

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

Polterovich, Victor and Popov, Vladimir and Tonis, Alexander, Resource Abundance: A Curse or Blessing? (June 2010). DESA Working Paper No. 93 , Available at SSRN: https://ssrn.com/abstract=1814382 or http://dx.doi.org/10.2139/ssrn.1814382

Victor Polterovich

Russian Academy of Sciences (RAS) - Laboratory "Mathematical Economics" ( email )

Russia

Vladimir Popov (Contact Author)

Central Economics and Mathematics Institute (CEMI) ( email )

Nakhimovsky Prospect 47
Moscow, 117418
Russia

New Economic School (NES) ( email )

100A Novaya Street
Moscow, Skolkovo 143026
Russia

Alexander Tonis

affiliation not provided to SSRN ( email )

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