Natural resources

Question 1

the resource curse might be defined as the adverse effects of a country’s natural resource wealth on its economic, social or political well-being

Answer 1

Ross (2015)

Question 2

Who was the term first used by?

Answer 2

Auty (1993)

Question 3

What does IMF define abundance as?

Answer 3

20% of export revenue or 20% of fiscal revenue

Question 4

Many NR abundant countries tend to have relatively poor growth performance and low savings rates

Answer 4

(Collier & Venables 2011)

Question 5

There is virtually no overlap between the set of countries with the largest natural resource endowments and the set of countries that have high levels of GDP. Resource intensity tends to correlate with slow economic growth

Answer 5

Sachs &; Warner (2001)

Question 6

famous relationship between exports of natural resources and real GDP growth, Botswana looks like an outlier

Answer 6

Sachs and Warner (1997)

Question 7

Where was the term Dutch Disease coined

Answer 7

The economist 1977

Question 8

studied 135 countries between 1975-2007 and found that a natural resource boom reduced other exports by 35-70%

Answer 8

Harding and Venables (2010)

Question 9

less developed countries are prematurely de-industrialising, argues that this has a detrimental effect on economic growth because:
 Manufacturing is technologically dynamic sector
 It absorbs a lot of unskilled labour
 It is a tradeable sector
 All these features are key for developing economies to achieve rapid and sustainable growth.

Answer 9

Rodrik (2016)

Question 10

Voracity effect Tornell and Lane (1999)

Answer 10

eager to consume a great amount of food. Powerful factions would compete for the natural resource windfall and try to grap the increase in national wealth. Leading to a “more than proportionate increase in fiscal redistribution” and slower growth

Question 11

Ross (2015)

Answer 11

found that the larger a country’s oil income, the less likely a country was to transition to a democracy, highlight the fact that NRs foster autocratic government

Question 12

 Mehlum et al (2006

Answer 12

poor institutions quality can lead to rent seeking and corruption causing misuse of natural resources. Empirical studies find natural resources had a significant negative effect on growth in countries with bad institutions, and an insignificant effect on growth in countries with good institutions.

Question 13

resource abundance remains the largest cause of worldwide conflict, resource booms raise the value of political power and can lead to civil war and conflict, obviously not conducive to growth, thus hindering the benefits of natural resources.

Answer 13

Collier and Hoeffler (2000)

Question 14

Examples of resource booms which have caused conflict

Answer 14

• Nigeria (Biafra, 1967-70)
• Congo (Katanga, 1960)
• Sierra Leone (2001)

Question 15

Citizens pressure for excessive consumption: managing expectations, following an oil discovery,

Answer 15

Collier (2017)

Question 16

Gylfason (2001)

Answer 16

negative correlation between level of education and amount of natural resources.

Question 17

this is unwise due to the high volatility revenues of natural resources, which follow long cycles and thus are difficult to smooth

Answer 17

Venables (2016)

Question 18

• Invest revenues in financial assets (sovereign wealth funds

Answer 18

Barbier and Burgess (2018)

Question 19

Harold Hotelling’s rule (1931)

Answer 19

• Country should be indifferent between keeping non-renewable resources under ground, when rate of return will be capital gain on these reserves due to increases in price, and extracting and selling these resources and getting a market rate of return
• The rate of increase in marginal resource rents should therefore equal the world interest rate

Question 20

1. Sustainable development= non-declining utility over generations
2. Need to maintain constant consumption over time
3. When resources are exhaustible the value of investment in produced capital needs to equal the value of rents extracted at each point in time, thus keeping net investment=

Answer 20

John Hartwick’s (1977) rule

Question 21

argues that people can make better use of rich resources than poor resources

Answer 21

Lewis (1955)

Question 22

Botswana and Chile

Answer 22

Diamonds and Copper

Question 23

argue minerals are not a curse in themselves, but the manner in which policy makers and businesses view minerals can be the curse.

Answer 23

• Wright and Czelusta (2004