How Do Natural Resources Affect Economic Growth?
Sommario
ABSTRACT 3
NATURAL RESOURCES COURSE 3
Volatility 4
Corruption 4
Weak Government 4
Unaccountable government 4
Dutch disease 5
RUSSIA AND THE DUTCH DESEASE 5
Growth and oil price 6
Appreciation of Real Exchange Rate 7
Manufacturing and services sector 7
Growth of real wage 8
LESSON FROM NORWAY 8
Benefits from the management of the natural resources 9
The separation of power 10
Diversification growth 10
CONCLUSION 10
REFERENCES 11
ABSTRACT
Despite common opinion, having natural resources could not be always a bless for a country. With this paper we want to provide an overall idea of the influence of natural resources wealth on the economic growth. Starting from an initial explanation of “Resource Curse”, the analysis will be focalized on Dutch Disease in Russia: one negative cause of Resource Curse referring to the largest oil producer country.
Moreover the study will show the case of Norway, for which the good management of natural resources wealth is still beneficial. Having natural resources, therefore, could be a beneficial if the government is able to control and handle all the resulting economic implications.
NATURAL RESOURCES COURSE
For several years the possession of oil, natural gas, or other valuable natural resources conferred on resource-exporting countries economic growth and an increase of average income. However, as it has been observed, many African countries such as Angola, Nigeria, Sudan, and the Congo are rich in oil, diamonds, or other minerals, and yet their inhabitants are still experiencing low per capita income and poor quality of life. In the meantime, the East Asian economies like Japan, Korea, Taiwan, Singapore and Hong Kong have achieved western-level standards of living despite being rocky islands with virtually no exportable natural resources.
The scatter plot (Figure 1, Appendix) reproduced from Manzano and Rigobon (2001), shows the relationship between primary export as a
ABSTRACT 3
NATURAL RESOURCES COURSE 3
Volatility 4
Corruption 4
Weak Government 4
Unaccountable government 4
Dutch disease 5
RUSSIA AND THE DUTCH DESEASE 5
Growth and oil price 6
Appreciation of Real Exchange Rate 7
Manufacturing and services sector 7
Growth of real wage 8
LESSON FROM NORWAY 8
Benefits from the management of the natural resources 9
The separation of power 10
Diversification growth 10
CONCLUSION 10
REFERENCES 11
ABSTRACT
Despite common opinion, having natural resources could not be always a bless for a country. With this paper we want to provide an overall idea of the influence of natural resources wealth on the economic growth. Starting from an initial explanation of “Resource Curse”, the analysis will be focalized on Dutch Disease in Russia: one negative cause of Resource Curse referring to the largest oil producer country.
Moreover the study will show the case of Norway, for which the good management of natural resources wealth is still beneficial. Having natural resources, therefore, could be a beneficial if the government is able to control and handle all the resulting economic implications.
NATURAL RESOURCES COURSE
For several years the possession of oil, natural gas, or other valuable natural resources conferred on resource-exporting countries economic growth and an increase of average income. However, as it has been observed, many African countries such as Angola, Nigeria, Sudan, and the Congo are rich in oil, diamonds, or other minerals, and yet their inhabitants are still experiencing low per capita income and poor quality of life. In the meantime, the East Asian economies like Japan, Korea, Taiwan, Singapore and Hong Kong have achieved western-level standards of living despite being rocky islands with virtually no exportable natural resources.
The scatter plot (Figure 1, Appendix) reproduced from Manzano and Rigobon (2001), shows the relationship between primary export as a
References: EUROMONITOR, “Russia’s Resource Curse: Oil Price Dependency Weighs on Economy” 8 October, 2012 from http://blog.euromonitor.com/2012/10/russias-resource-curse-oil-price-dependency-weighs-on-economy-.html Oomes, N Cappelen, Ådne; Mjøset, Lars (2009) : “Can Norway be a role model for natural resource abundant countries?” Research paper/UNU-WIDER,No.2009.23, http://hdl.handle.net/10419/45096 Beck R., Kamps A., Mileva E., (2007) “Long-term growth Prospects for the Russian economy”, European Central Bank- Eurosystem, Occasional Paper Series N 58 / March 2007