Natural Resources: A Blessing or a Curse?

We examine empirically the effect of natural resource abundance on economic growth. We find that natural resources have a negative impact on growth when considered in isolation, but a positive impact on growth when including in the analysis other variables such as corruption, investments, openness, terms of trade, and schooling, and treating these variables as independent. However, when we take account of the effect of natural resources on the other variables and furthermore consider the indirect effect on growth, that is, when we examine possible transmission channels, we find a strong negative effect of natural resources on growth. Finally, we calculate the relative importance of each transmission channel.Natural Resources, growth, transmission channels

Institutional Explanations of Economic Development: the Role of Precious Metals

Recent research has emphasized the influence of colonization on the institutional development and economic performance in former European colonies. Where European colonizers settled, they replicated the investment-conducive institutions found at home. It has been argued that a harsh disease environment and a highly urbanized native population worked against colonization. We show evidence for another significant element explaining the endogenous character of colonization strategies and the formation of institutions. We find the presence of precious metals, gold and silver, to imply an increase in settlements, and an improvement in institutional quality, even when correcting for settlements. Highly valued gold and silver reserves attracted Europeans in large numbers and resulted in an institutional upgrade of mineral-rich areas.Precious metals, Institutions, Economic development

Natural Resources, Innovation, and Growth

This paper investigates the connection between resource abundance and innovation, as a transmission mechanism that can elucidate part of the resource curse hypothesis; i.e. the observed negative impact of resource wealth on income growth. We develop a variation of the Ramsey-Cass-Koopmans model with endogenous growth to explain the phenomenon. In this model, consumers trade off leisure versus consumption, and firms trade off innovation efforts versus manufacturing. For this model, we show that an increase in resource income frustrates economic growth in two ways: directly by reducing work effort and indirectly by inducing a smaller proportion of the labor force to engage in innovation.Natural Resources, Growth, Innovation

The scale of transition: an integrated study of the performance of CHP biomass plants in the Netherlands

Combined heat and power (CHP) plants using biomass are considered important to substantially increase the share of renewables in the total energy supply and meet ambitious climate targets. The analysis focuses on the links between the size of bio-fuelled CHP plants and their techno-economic and environmental performance, as well as social acceptance. In an exploratory way, this paper compares the performance of six bioenergy plants in the Netherlands in these three key areas, thereby focusing on the link between the size of biomass plants and overall performance in an integrated multi-dimensional manner. The findings show that economic and environmental performance does not necessarily improve with scale and, in effect, several large-scale biomass plants score low in several environmental indicators. In addition, we find that there is often limited data availability on economic, environmental and social characteristics of biomass plants in the Netherlands, despite the fact that their operations are largely supported by public funds

Understanding the global patterns of Venezuelan migration:determinants of an expanding diaspora

The economic, political and humanitarian crisis in Venezuela intensified since 2015 and has led to the largest migration crisis in the region’s modern history. In parallel, the composition of the major destination countries has changed fundamentally. This paper investigates the factors determining the choice of destination country of Venezuelan migrants in the pre- and post-2015 period. Exploiting the United Nations migration dataset (for 230 countries from 1990 to 2017), we apply a Poisson Pseudo-Maximum Likelihood (PPML) estimator to a modified gravity model of migration. The results suggest that Venezuelans were generally choosing a certain destination country based on economic criteria in times of relative stability (1990 to 2015). However, this determinant loses its importance during times of crisis (2015 to 2017), when Venezuelans were primarily immigrating to geographically proximate nations. Consistently for both periods Venezuelans appear to migrate in larger numbers to destinations with an already established network of compatriots.</p

Income inequality and the oil resource curse

Surprisingly, there has been little research conducted about the cross-country relationship between oil dependence/abundance and income inequality. At the same time, there is some tentative evidence suggesting that oil rich nations tend to under-report data on income inequality, which can potentially influence the estimated empirical relationships between oil richness and income inequality. In this paper we contribute to the literature in a twofold manner. First, we explore in depth the empirical relationship between oil and income inequality by making use of the Standardized World Income Inequality Database – the most comprehensive dataset on income inequality providing comparable data for the broadest set of country-year observations. Second, this is the first study to our knowledge that adopts an empirical framework to examine whether oil rich nations tend to under-report data on income inequality and the possible implications thereof. We make use of Heckman selection models to validate the tendency of oil rich countries to under-report and correct for the bias that might arise as a result of this – we find that oil is associated with lower income inequality with the exception of the very oil-rich economies

Happiness and the Resource Curse

There has been increasing interest in the so-called ‘resource curse’: the tendency of resource-rich countries to underperform in several socio-economic outcomes. More recently, several papers have looked beyond the traditional impact on economic growth and instead focused on the effects upon broader human welfare indicators. A separate empirical literature in recent decades has probed into the determinants of happiness and subjective well-being (using either country or household data). Our paper contributes to the literature by bringing these two empirical strands of research together. This is the first study, to our knowledge, that makes use of a large panel dataset to explore the links between changes in happiness across countries and several measures of resource wealth. Consistent with prior empirical evidence of a resource curse in oil-rich nations, we find that oil rents are negatively linked to improvements in happiness over time. This happiness ‘resource curse’ curse appears to be oil-specific and holds both for the levels as well as changes in happiness

The Socio-Economic Impact of an Abrupt Loss of Oil:A Synthetic Control Approach in the Case of Sudan

With the secession of South Sudan in 2011, the Republic of Sudan experienced a sudden loss of more than 70% of its oil reserves. Few countries have experienced such a dramatic macroeconomic adjustment within a short period of time. While earlier studies have explored the socio-economic impacts of oil discoveries, little is known about what happens in the case of an abrupt reversal of an oil windfall. We make use of the synthetic control method to isolate the effects of such an abrupt oil loss. We find little evidence of oil-induced socio-economic effects with the exception of higher unemployment.</p

Oil, export diversification and economic growth in Sudan:evidence from a VAR model

There is an extensive literature demonstrating a positive link between export diversification and economic growth. In parallel, the resource curse thesis posits export concentration as an important mechanism curtailing growth in mineral-rich countries. Our analysis contributes to this literature by empirically investigating the interaction between oil dependence captured by the share of oil rents in GDP and export diversification and economic growth for Sudan. We do this with the help of a VAR model using annual data between 1960 and 2018. In comparison to earlier studies, our dataset covers also Sudan’s post-oil boom period, which coincided with a substantial drop in oil dependence after the 2011 secession of South Sudan. We find that oil rents appear to have a statistically significant and negative effect on export diversification, although contemporaneously rather than in the long-term. However, we find no evidence of a statistically significant impact of either oil dependence or export diversification on economic growth, as suggested by the resource curse hypothesis