The Implications of Natural Resource Exports for Non-Resource Trade

45 Pages Posted: 1 Feb 2013

See all articles by Torfinn Harding

Torfinn Harding

University of Oxford

Anthony J. Venables

University of Oxford; Centre for Economic Policy Research (CEPR)

Date Written: January 2013

Abstract

Foreign exchange windfalls such as those from natural resource revenues change non-resource exports, imports, and the capital account. We study the balance between these responses and, using data on 41 resource exporters for 1970-2006, show that the response to a dollar of resource revenue is, approximately, to decrease non-resource exports by 75 cents and increase imports by 25 cents, implying a negligible effect on foreign saving. The negative per dollar impact on exports is larger for countries which have good institutions and higher income levels. These countries have a higher share of manufacturing in their non-resource exports, and we show that manufactures are more susceptible than other products to being crowded out by resource exports.

Keywords: Dutch disease, exports, imports, natural resources, resource curse, trade

JEL Classification: E21, E62, F43, H63, O11, Q33

Suggested Citation

Harding, Torfinn and Venables, Anthony J., The Implications of Natural Resource Exports for Non-Resource Trade (January 2013). CEPR Discussion Paper No. DP9318. Available at SSRN: https://ssrn.com/abstract=2210289

Torfinn Harding (Contact Author)

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

HOME PAGE: http://www.economics.ox.ac.uk/index.php/staff/page/harding

Anthony J. Venables

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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