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RESOURCE-BASED ECONOMIC GROWTH, PAST AND PRESENT

By Gavin Wright and Jesse Czelusta

Abstract

Recent literature argues that natural resource abundance is likely to be bad for economic growth. This paper provides a counterargument by highlighting examples of successful resource-based development. The first is historical: the United States from the mid-nineteenth century to the mid-twentieth. Contrary to the common perception of mineral resources as exogenously given fixed stocks, we show that U.S. mineral abundance was an endogenous historical phenomenon driven by collective learning, increasing returns, and an accommodating legal environment. The paper then considers whether resource-based development is still feasible in the modern global economy. Recent instances of successful resource-driven growth-- notably Australia, Chile and Norway-- affirm that so-called “nonrenewable ” resources can be progressively extended through exploration, technological progress, and investments in appropriate knowledge. Indeed, minerals constitute a high-tech knowledge industry in many countries. Far from being in fixed supply, production and reserves have continued to rise in most mineral-based economies, even in the face of declining real prices.

Year: 2002
OAI identifier: oai:CiteSeerX.psu:10.1.1.418.6694
Provided by: CiteSeerX
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