Book
Resource Abundance and Economic Development

Since the 1960s the per capita incomes of the resource-poor countries have grown significantly faster than those of the resource-abundant countries. In fact, in recent years economic growth has been inversely proportional to the share of natural resource rents in GDP, so that the small mineral-driven economies have performed least well and the oil-driven economies worst of all. Yet the mineral-driven resource-rich economies have high growth potential because the mineral exports boost their capacity to invest and to import. "Resource Abundance and Economic Development" explains the disappointing performance of resource-abundant countries by extending the growth accounting framework to include natural and social capital. The resulting synthesis identifies two contrasting development trajectories: the competitive industrialization of the resource-poor countries and the staple trap of many resource-abundant countries. The resource-poor countries are less prone to policy failure than the resource-abundant countries because social pressures force the political state to align its interests with the majority poor and follow relatively prudent policies. Resource-abundant countries are more likely to engender political states in which vested interests vie to capture resource surpluses (rents) at the expense of policy coherence. A longer dependence on primary product exports also delays industrialization, heightens income inequality, and retards skill accumulation. Fears of 'Dutch disease' encourage efforts to force industrialization through trade policy to protect infant industry. The resulting slow-maturing manufacturing sector demands transfers from the primary sector that outstrip the natural resource rents and sap the competitiveness of the economy. The chapters in this collection draw upon historical analysis and models to show that a growth collapse is not the inevitable outcome of resource abundance and that policy counts. Malaysia, a rare example of successful resource-abundant development, is contrasted with Ghana, Bolivia, Saudi Arabia, Mexico, and Argentina, which all experienced a growth collapse. The book also explores policies for reviving collapsed economies with reference to Costa Rica, South Africa, Russia and Central Asia. It demonstrates the importance of initial conditions to successful economic reform.

Table of contents
  1. Part I: Introduction
    1. Introduction and Overview
    Richard M. Auty
    More Working Paper | Resource Abundance and Economic Development
  2. Part II: Critical Parameters in Resource-Based Development Models
    2. Natural Resources, Capital Accumulation, Structural Change, and Welfare
    Richard M. Auty and Sampsa Kiiski
  3. Part II: Critical Parameters in Resource-Based Development Models
    3. The Sustainability of Extractive Economies
    Kirk Hamilton
  4. Part II: Critical Parameters in Resource-Based Development Models
    4. Natural Resources, Human Capital, and Growth
    Nancy Birdsall, Thomas Pinckney and Richard Sabot
  5. Part II: Critical Parameters in Resource-Based Development Models
    5. The Social Foundations of Poor Economic Growth in Resource-Rich Countries
    Michael Woolcock, Lant Pritchett and Jonathan Isham
  6. Part III: Long-Term Perspective on, and Models of, Resource-Based Growth
    6. Natural Resources and Economic Development: The 1870-1914 Experience
    Ronald Findlay and Mats Lundahl
    More Working Paper | Resource-Led Growth - A Long-Term Perspective
  7. Part III: Long-Term Perspective on, and Models of, Resource-Based Growth
    7. Short-Run Models of Contrasting Natural Resource Endowments
    S. Mansoob Murshed
    More Working Paper | A Macroeconomic Model of a Developing Country Endowed with a Natural Resource
  8. Part III: Long-Term Perspective on, and Models of, Resource-Based Growth
    8. Political Economy of Resource-Abundant States
    Richard M. Auty and Alan H. Gelb
  9. Part IV: Development Trajectories of Resource-Abundant Countries
    9. Competitive Industrialization with Natural Resource Abundance: Malaysia
    Zainal Abidin Mahani
  10. Part IV: Development Trajectories of Resource-Abundant Countries
    10. A Growth Collapse with Diffuse Resources: Ghana
    Robert Osei
  11. Part IV: Development Trajectories of Resource-Abundant Countries
    11. A Growth Collapse with Point Resources: Bolivia
    Richard M. Auty and José Luis Evia
  12. Part IV: Development Trajectories of Resource-Abundant Countries
    12. A Growth Collapse with High Rent Point Resources: Saudi Arabia
    Richard M. Auty
  13. Part IV: Development Trajectories of Resource-Abundant Countries
    13. Large Resource-Abundant Countries Squander their Size Advantage: Mexico and Argentina
    Richard M. Auty
  14. Part V: Lessons for Policy Reform
    14. Reforming a Small Resource-Rich Developing Market Economy: Costa Rica
    Gustavo Barboza and José Cordero
  15. Part V: Lessons for Policy Reform
    15. Growth, Capital Accumulation, and Economic Reform in South Africa
    Carolyn Jenkins
  16. Part V: Lessons for Policy Reform
    16. Reforming Resource-Abundant Transition Economies: Kazakhstan and Uzbekistan
    Richard M. Auty
    More Working Paper | The IMF Model and Resource-Abundant Transition Economies
  17. Part V: Lessons for Policy Reform
    17. Reforming a Large Resource-Abundant Transition Economy: Russia
    Anil Markandya and Alina Averchenkova
  18. Part V: Lessons for Policy Reform
    18. A Nordic Perspective on Natural Resource Abundance
    Thorvaldur Gylfason
    More Working Paper | Natural Resources and Economic Growth
  19. Part VI: Conclusions
    19. Conclusions: Resource Abundance, Growth Collapse, and Policy
    Richard M. Auty
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Endorsements

'Not only does this book provide a foray into the cutting edge of cross-disciplinary research into the problems of natural resource-led development, but it is also specialized reading on how we might more broadly understand the connections between resources and conflict. This volume poses a serious challenge to theories of 'ecoviolence' that see scarcity of resources as a cause of socio-economic decay and violence.' - Journal of Peace Research

'... the volume is to be welcomed, and will hopefully be widely read and cited.' - Journal of International Development