Natural resources, export structure, and investment

Abstract

We present crosscountry empirical evidence on the role of natural resources in explaining long-run differences in private investment as a share of GDP in a sample of 72 developing countries. Our empirical results suggest important differences between oil and non-oil resources. While revenue from oil exports tends to increase private (and public) investment, there is also a robust negative effect from a measure of export concentration. After controlling for these two aspects of export structure, there is little additional information in other measures of resource abundance, or in other suggested investment determinants, such as measures of the quality of institutions, political instability or macroeconomic volatility.

Planning for a Qatar Without Oil: Tourism and Economic Diversification, a Battle of Perceptions

“…This is particularly true when the exports are primary products. Falls in commodity prices result in dramatic economic slowdowns and this leads to poor investment especially from the private sector (Bond and Malik, 2009). Economic development is not just growth in gross national product (GNP) (Cypher and Dietz, 2009), it is about developing a skilled, educated workforce, creating knowledge and making technological advancements, enhancing well-being and improving the quality of life.…”

Do natural resources define convergence clubs? Empirical evidence from the Kazakh regions

“…Most commonly used are data on primary commodity exports as share in gross regional product (GRP) or total exports (Bond and Malik, 2009). Based on these indicators various authors established a negative relationship between natural resource abundance and economic growth.…”

“…For creating a dummy variable indicating resource endowment 17 we instead apply data on physical units (in thousand tonnes and millions of cubic meters 18 ) produced by the resource banking industries in each region as share in total physical units extracted in 14 Bond and Malik (2009) and Isham et al (2005) also use dummy variables to indicate resource countries. 15 This is due to data unavailability.…”

“…This question became a key issue in the empirical literature on natural resource abundance and economic development. 13 Bond and Malik (2009) point out that 'empirical findings [are] highly sensitive to the choice of resource measures.' In general, two types of natural resource indicators are distinguished.…”

“…12 For the countries in Central Asia this is established by Felipe and Kumar (2010). 13 See for example Bond andMalik (2009) andBrunnschweiler (2008).…”