The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth

Middlebury College Discussion Paper No. 2003-08

38 Pages Posted: 24 Jun 2003

See all articles by Jonathan Isham

Jonathan Isham

Middlebury College - Department of Economics

Michael Woolcock

World Bank - Development Research Group (DECRG); Harvard University - Kennedy School of Government; Harvard University - Harvard Kennedy School (HKS)

Lant Pritchett

Harvard University - Harvard Kennedy School (HKS); Center for Global Development

Gwen Busby

Cornell University

Date Written: April 2003

Abstract

Many oil, mineral, and plantation crop-based economies experienced a substantial deceleration of growth since the commodity boom and bust of the 1970s and early 1980s. Rodrik (1999) has demonstrated that the magnitude of a country's growth deceleration since the 1970s is a function of both the magnitude of the shocks and a country's "social capability" for adapting to shocks. In this paper, we demonstrate that in this respect countries, with what we term "point source" natural resource exports are doubly disadvantaged. Not only are countries with these types of exports exposed to terms of trade shocks, but the institutional capability for responding to shocks is itself endogenous and negatively related to export composition. Using two different sources of export data and classifications of export composition, we show that point source and coffee/cocoa exporting countries do worse across an array of governance indicators (controlling for a wide array of other potential determinants of governance). This is not just a function of being a "natural resource" exporter, as countries with natural resource exports that are "diffuse" do not show the same strong differences - and have had more robust growth recoveries.

Keywords: Economic Growth, Institutions, Natural Resource Endowment

JEL Classification: 013, 050, Z13

Suggested Citation

Isham, Jonathan and Woolcock, Michael and Pritchett, Lant and Busby, Gwen, The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth (April 2003). Middlebury College Discussion Paper No. 2003-08. Available at SSRN: https://ssrn.com/abstract=410364 or http://dx.doi.org/10.2139/ssrn.410364

Jonathan Isham (Contact Author)

Middlebury College - Department of Economics ( email )

Munroe Hall
Middlebury, VT 05753
United States
802-433-3238 (Phone)

Michael Woolcock

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
Mailstop MC3-306
Washington, DC 20433
United States
202-473-9258 (Phone)

HOME PAGE: http://econ.worldbank.org/staff/mwoolcock

Harvard University - Kennedy School of Government ( email )

Littauer-G-11G
Cambridge, MA 02138
United States
617-495-0911 (Phone)

HOME PAGE: http://ksgfaculty.harvard.edu/michael_woolcock

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Lant Pritchett

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-496-4562 (Phone)
617-496-2554 (Fax)

HOME PAGE: http://ksghome.harvard.edu/~lpritch/

Center for Global Development

2055 L St. NW
5th floor
Washington, DC 20036
United States

Gwen Busby

Cornell University ( email )

Ithaca, NY 14853
United States

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