The Relative Richness of the Poor? Natural Resources, Human Capital, and Economic Growth

48 Pages Posted: 13 Jan 2005

See all articles by Claudio Bravo-Ortega

Claudio Bravo-Ortega

School of Business, Universidad Adolfo Ibañez

Jose de Gregorio

Central Bank of Chile; Universidad de Chile; National Bureau of Economic Research (NBER)

Date Written: January 2005

Abstract

Are natural resources a blessing or a curse? Bravo-Ortega and De Gregorio present a model in which natural resources have a positive effect on the level of income and a negative effect on its growth rate. The positive and permanent effect on income implies a welfare gain. There is a growth effect stemming from a composition effect. However, the authors show that this effect can be offset by having a large level of human capital. They test their model using panel data for the period 1970-90. They extend the usual specifications for economic growth regressions by incorporating an interaction term between human capital and natural resources, showing that high levels of human capital may outweigh the negative effects of the natural resource abundance on growth. The authors also review the historical experience of Scandinavian countries, which in contrast to Latin America, another region well-endowed with natural resources, shows how it is possible to grow fast based on natural resources.

This paper is a product of the Office of the Chief Economist, Latin America and the Caribbean Region.

Keywords: Education, Macroecon & Growth

JEL Classification: J24, O41, O57, Q00

Suggested Citation

Bravo-Ortega, Claudio and de Gregorio, Jose, The Relative Richness of the Poor? Natural Resources, Human Capital, and Economic Growth (January 2005). World Bank Policy Research Working Paper No. 3484. Available at SSRN: https://ssrn.com/abstract=648006 or http://dx.doi.org/10.2139/ssrn.648006

Claudio Bravo-Ortega (Contact Author)

School of Business, Universidad Adolfo Ibañez ( email )

DIAGONAL LAS TORRES 2640 PEÑALOLÉN
EDIFICIO POST GRADO
Santiago
Chile

Jose De Gregorio

Central Bank of Chile ( email )

Agustinas 1180
Santiago
Chile

Universidad de Chile ( email )

Ministry of Finance Teatinos l20 - Piso l2
Santiago
Chile

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
1,022
Abstract Views
4,443
rank
20,930
PlumX Metrics