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Natural Resource Abundance and Human Capital Accumulation

UC Berkeley, Economics Working Paper

36 Pages Posted: 26 Dec 2001  

Jean-Philippe Stijns

University of California, Berkeley - Department of Economics; Universite de Liege

Date Written: December 2001

Abstract

This study examines indicators of human capital accumulation together with data for natural resource abundance and rents in a panel of 102 countries running from 1970 to 1999. Mineral wealth makes a positive and marked difference on human capital accumulation. Matching on observables reveals that cross-country results are not driven by a third factor such as overall economic development. Political stability does seem to affect both human capital accumulation and subsoil wealth, but not enough to overturn my conclusions. Instrumentation reveals that reverse causality running from education to natural resources does not drive the results. Estimation of a panel VAR indicates that, over the three decades, a $1 shock to resource rent generates five cents of extra educational expenditure per year. These results are consistent with Hirschman's conjecture that enclave economies have weaker production leakages but stronger government revenue linkages than other activities. The "wealth channel" identified in this paper implies that caution should be exerted when discouraging countries from exploiting their mineral wealth, especially for countries where human capital is scarce.

Keywords: education, natural resources, resource booms, economic development

JEL Classification: O13, Q33, I22

Suggested Citation

Stijns, Jean-Philippe, Natural Resource Abundance and Human Capital Accumulation (December 2001). UC Berkeley, Economics Working Paper. Available at SSRN: https://ssrn.com/abstract=294746 or http://dx.doi.org/10.2139/ssrn.294746

Jean-Philippe Stijns (Contact Author)

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-501-8662 (Phone)
510-642-6614 (Fax)

HOME PAGE: http://www.well.com/user/jeanphi/resume.html

Universite de Liege ( email )

Faculte d' Economie Boulevard du Rectorat 7 (B31)
B-4000 Liege
Belgium

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