Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
962530 | Journal of International Economics | 2015 | 13 Pages |
Abstract
We advance a novel mechanism that helps to explain the puzzling evidence on the natural resource curse. The new channel arises in a standard dynamic Heckscher-Ohlin model composed of small-open economies that take international output prices as given. Within this framework, a more capital-intensive primary sector implies that natural-resource abundant economies grow more slowly along the adjustment path. This effect might be only temporary because the natural input also affects long-run income, and not necessarily in the same direction as transitional growth. We produce quantitative results that show that the new mechanism can account for a significant fraction of the observed output growth gap between resource rich and resource poor U.S. states.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Maria Dolores Guilló, Fidel Perez-Sebastian,