Booming Sector and De-Industrialisation in a Small Open Economy

Corden, W. M.; Neary, J. Peter

doi:10.2307/2232670

Cited by 2,322 publications

(1,580 citation statements)

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“…There is a substantial theoretical literature on the Dutch disease, see, for instance Bruno and Sachs (1982), Corden and Neary (1982), Eastwood and Venables (1982), Corden (1984), Van Wijnbergen (1984) and Neary and van Wijnbergen (1984). The general finding in most of these papers is that there is an inverse long run relationship between increased exploitation of natural resources and growth in the manufacturing sector, similar to what the Netherlands experienced in the 1960s.…”

Section: Macroeconomic Impacts Of An Energy Discoverymentioning

confidence: 98%

“…More formally, Corden and Neary (1982) assume that the booming sector (B) and the tradeable sectors (T) produce tradeables given world prices, whereas the prices for non-tradables (N) are given by domestic factors. The energy boom is understood as an exogenous (unpredicted) technical improvement in B.…”

Section: Macroeconomic Impacts Of An Energy Discoverymentioning

confidence: 99%

“…The approach we adopt relies on the standard model presented in Corden and Neary (1982), but augmented in some dimensions by allowing for productivity spillovers between sectors of the economy. In particular, we develop a framework where the energy sector uses its own factor of production and develops its own specific productivity dynamics, but there may be instantaneous spillovers to all the other domestic sectors.…”

Section: Theory Meets Datamentioning

confidence: 99%

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Boom or Gloom? Examining the Dutch Disease in a Two-Speed Economy

Bjjrnland

Thorsrud

2013

SSRN Journal

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Traditional studies of the Dutch disease do not typically account for productivity spillovers between the booming energy sector and non-oil sectors. This study identifies and quantifies these spillovers using a Bayesian Dynamic Factor Model (BDFM). The model allows for resource movements and spending effects through a large panel of variables at the sectoral level, while also identifying disturbances to the real oil price, global demand and non-oil activity. Using Norway as a representative case study, we find that a booming energy sector has substantial spillover effects on the non-oil sectors. Furthermore, windfall gains due to changes in the real oil price also stimulates the economy, but primarily if the oil price increase is caused by global demand. Oil price increases due to, say, supply disruptions, while stimulating activity in the technologically intense service sectors and boosting government spending, have small spillover effects on the rest of the economy, primarily because of reduced cost competitiveness. Yet, there is no evidence of Dutch disease. Instead, we find evidence of a two-speed economy, with non-tradables growing at a much faster pace than tradables. Our results suggest that traditional Dutch disease models with a fixed capital stock and exogenous labor supply do not provide a convincing explanation for how petroleum wealth affects a resource rich economy when there are productivity spillovers between sectors.

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Section: Macroeconomic Impacts Of An Energy Discoverymentioning

confidence: 98%

Section: Macroeconomic Impacts Of An Energy Discoverymentioning

confidence: 99%

Section: Theory Meets Datamentioning

confidence: 99%

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Boom or Gloom? Examining the Dutch Disease in a Two-Speed Economy

Bjjrnland

Thorsrud

2013

SSRN Journal

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“…Apenas na década de 1980 apareceram os primeiros trabalhos acadêmicos sobre ela (Corden e Neary, 1982;Corden, 1984). Até hoje a literatura sobre o tema é escassa e insuficiente.…”

Section: Cinco Teses Adicionaisunclassified

Macroeconomia estruturalista do desenvolvimento

Bresser-Pereira

Gala

2010

Rev. Econ. Polit.

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Structuralist development macroeconomics. This paper presents some basic ideas and models of a structuralist development macroeconomics (the tendencies to the overvaluation of the exchange rate and the tendency of wages to grow below productivity, the critique of growth with foreign savings, and a new model of the Dutch disease) that complement and actualize the thought of the Latin-American structuralist school that developed around ECLAC from the late 1940s to the 1960s. on the other hand, it suggests that a new national development strategy based on the experience of fast growing Asian countries is emerging; and argues that only the countries that adopt such strategy based on growth with domestic savings, fiscal and foreign trade responsibility and a competitive exchange rate will be able to catch up.Keywords: Latin America; structuralism; development macroeconomics; national strategy; developmentalism.JEL Classification: E10; E11; E12. INTRoDuçãoEntre os anos 1930 e 1970, a América Latina e principalmente seus dois maiores países, Brasil e México, se industrializaram e apresentaram elevadas taxas de crescimento. Este desenvolvimento que também ganhava momentum nos demais países subdesenvolvidos deu origem, após a Segunda Guerra Mundial, à teoria estruturalista da Cepal. Esta teoria, e a respectiva estratégia nacional de desenvolvimento, surgiu no quadro da crise das oligarquias agrário-exportadoras depen-

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“…The spectrum of issues raised in the literature ranges from the issues of currency appreciation in the era of high resource prices and the subsequent "Dutch disease" effects that deteriorate the development of industrial sector of the economy (Corden and Neary, 1984;Sachs and Warner, 1995) to the political economy problems associated with the numerous nonproductive activities of economic agents provoked by the huge natural resource rents that undermine the institutional development of the economy and slow down economic development (Lane and Tornell, 1999;Auty, 2001) One of the channels that the literature addresses deals with the link between human capital development and natural resource abundance (Leamer et al, 1999;Gylfason 2001). The argument is based on the idea that resource intensive sectors absorb national savings while creating only a few eminently qualified jobs which leads to lower incentive of the society to educate their citizens compare to the societies with lower abundance in natural resources.…”

Section: Introductionmentioning

confidence: 99%

Human Capital, Industrial Growth and Resource Curse

Suslova

Volchkova

2012

SSRN Journal

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How the country's natural resource abundance affects the industrial growth? We argue that one of the transmission mechanisms is via the accumulation of country's high skilled human capital. In particular, we empirically investigate whether link between country's natural resource endowment and industry-level growth depends on industry human capital requirement. We show that in the 1980s and the 1990s, industrial sectors that are high-skilled labor intensive developed disproportionately slowly in countries with higher contribution of natural resource sectors to GDP. While low-skilled labor intensity did not differentiate industrial growth between resource rich and resource poor countries. Our findings are in line with the theoretical argument that deteriorative effect of natural resources on the development of industrial sector is a byproduct of the capital accumulation process in the resource abundant open economy that slows down the development of marginally high-skilled labor force compared to the resource poor economies.

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Booming Sector and De-Industrialisation in a Small Open Economy

Cited by 2,322 publications

References 17 publications

Boom or Gloom? Examining the Dutch Disease in a Two-Speed Economy

Boom or Gloom? Examining the Dutch Disease in a Two-Speed Economy

Macroeconomia estruturalista do desenvolvimento

Human Capital, Industrial Growth and Resource Curse

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