Natural Resources, Innovation, and Growth

39 Pages Posted: 28 Oct 2004

See all articles by Elissaios Papyrakis

Elissaios Papyrakis

VU University Amsterdam - Institute for Environmental Studies (IVM)

Reyer Gerlagh

Tilburg University - Tilburg University School of Economics and Management

Date Written: October 2004

Abstract

This paper investigates the connection between resource abundance and innovation, as a transmission mechanism that can elucidate part of the resource curse hypothesis; i.e. the observed negative impact of resource wealth on income growth. We develop a variation of the Ramsey-Cass-Koopmans model with endogenous growth to explain the phenomenon. In this model, consumers trade off leisure versus consumption, and firms trade off innovation efforts versus manufacturing. For this model, we show that an increase in resource income frustrates economic growth in two ways: directly by reducing work effort and indirectly by inducing a smaller proportion of the labor force to engage in innovation.

Keywords: Natural resources, Growth, Innovation

JEL Classification: O13, O31, Q33

Suggested Citation

Papyrakis, Elissaios and Gerlagh, Reyer, Natural Resources, Innovation, and Growth (October 2004). FEEM Working Paper No. 129.04. Available at SSRN: https://ssrn.com/abstract=609764 or http://dx.doi.org/10.2139/ssrn.609764

Elissaios Papyrakis (Contact Author)

VU University Amsterdam - Institute for Environmental Studies (IVM) ( email )

De Boelelaan 1115
Amsterdam, 1081 HV
Netherlands
+31 20 44 49502 (Phone)
+31 20 44 49553 (Fax)

Reyer Gerlagh

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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