Natural Resource Abundance and Economic Growth

54 Pages Posted: 21 Jul 2000 Last revised: 14 Nov 2004

Jeffrey D. Sachs

Columbia University - Columbia Earth Institute; National Bureau of Economic Research (NBER)

Andrew M. Warner

Harvard University - Center for International Development (CID)

Date Written: December 1995

Abstract

One of the surprising features of modern economic growth is that economies with abundant natural resources have tended to grow less rapidly than natural-resource-scarce economies. In this paper we show that economies with a high ratio of natural resource exports to GDP in 1971 (the base year) tended to have low growth rates during the subsequent period 1971-89. This negative relationship holds true even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates, and other variables. We explore the possible pathways for this negative relationship by studying the cross-country effects of resource endowments on trade policy, bureaucratic efficiency, and other determinants of growth. We also provide a simple theoretical model of endogenous growth that might help to explain the observed negative relationship.

Suggested Citation

Sachs, Jeffrey D. and Warner, Andrew M., Natural Resource Abundance and Economic Growth (December 1995). NBER Working Paper No. w5398. Available at SSRN: https://ssrn.com/abstract=225459

Jeffrey D. Sachs (Contact Author)

Columbia University - Columbia Earth Institute ( email )

314 Low Library
535 West 116th Street, MC 4327
New York, NY 10027
United States
212-854-8704 (Phone)
212-854-8702 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Andrew M. Warner

Harvard University - Center for International Development (CID) ( email )

One Eliot Street Building
79 JFK Street 79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-3628 (Phone)
617-495-0712 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
991
rank
20,156
Abstract Views
15,082
PlumX