The Implications of Natural Resource Exports for Non-Resource Trade
45 Pages Posted: 1 Feb 2013
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: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Energy, the Exchange Rate, and the Economy: Macroeconomic Benefits of Canada's Oil Sands Production
By Tamim Bayoumi and Martin Mühleisen
-
A Fair Exchange?: Theory and Practice of Calculating Equilibrium Exchange Rates
By Tamim Bayoumi, Hamid Faruqee, ...
-
Does the Canadian Economy Suffer from Dutch Disease?
By Michel A. R. Beine, Charles S. Bos, ...