Last Updated 01 Apr 2020

All About Nature Resource Management

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A further example that a country, where a certain natural resource is not available, can use other factors including human resource, intelligent and geographic advantage etc to develop their country, however that country has to depend on other countries, in order to acquire it, owing to which the former has to invest a lot of monetary resources in the trade, is true can be found in measurement of natural resource abundance that data on rents compiled by the World Bank.

Their main results do not seem to corroborate the existence of a "resource curse" among transition countries. In fact, most of their measures of resource abundance have a positive effect on economic growth. These results hold even for point-resources which are generally said to be the most detrimental to growth. On the contrary, agriculture seems to have a negative effect on growth. These results are robust to the inclusion of additional control variables widely used in the literature.

Changing the measure of economic reform (price liberalization or level of privatization) do not alter results. Their results indicate that institutional quality has a positive impact on economic growth. This interaction term has a positive impact of growth (like institutions per se) whereas the coefficient associated to natural resource abundance is now negative. The other coefficients mostly have the expected signs. They find evidence of economic convergence between countries since initial income has a negative effect on growth.

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Main results are unchanged, oil exports still have a positive effect on economic growth whereas mining and agricultural exports have a negative one. They also use forest land and agricultural land as a share of total area in order to have a better measure of "diffuse resources" (since we do not have many plantation crops in transition countries contrary to Latin America or even Africa). They both have a negative effect.

They measure natural resources by resource rents as a share of GDP. Their main results do not support the idea that there is a "curse of natural resources" in transition countries. The researchers find a positive and robust impact of natural resources on economic growth and this result holds even for "point resources" and oil which are generally seen as having a negative effect on economic performances. On the contrary, agriculture and forest ("diffuse" resources) seem to have detrimental effects on growth.

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