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Textbook The Curse of Natural Resources A Developmental Analysis in A Comparative Context 1St Edition Sevil Acar Auth Ebook All Chapter PDF
Textbook The Curse of Natural Resources A Developmental Analysis in A Comparative Context 1St Edition Sevil Acar Auth Ebook All Chapter PDF
Developmental Analysis in a
Comparative Context 1st Edition Sevil
Acar (Auth.)
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THE CURSE
OF NATURAL
RESOURCES
A DEVELOPMENTAL ANALYSIS
IN A COMPARATIVE CONTEXT
SEVIL ACAR
The Curse of Natural Resources
Sevil Acar
The paradox that natural resources give rise to ill effects in most of the
economies endowed with them has been proven for many countries when
economic growth and other macroeconomic outcomes are considered.
However, how resources affect human development and social well-being
in a sustainability context has not attracted enough attention yet.
This study contributes to the literature on the links between human
development, welfare, and natural resources distinguishing between types
of resources. A panel of countries are examined in terms of the effects of
their resources on human development and genuine saving, which is a
sustainability indicator that takes into account the welfare of future gen-
erations incorporating the changes in different kinds of capital. The main
finding is that exportation of agricultural raw materials is associated with
significant deterioration in human development, while extractive resource
exports, such as energy and minerals, imply severe negative outcomes for
genuine savings. The different effects of resources are explained by various
institutional frameworks such as political regimes, constitutional roots,
colonial origins, and quality of governance.
Finally, the scope of the book is extended to handle a two-country exam-
ination approach in order to demonstrate how an oil-rich economy can
develop in comparison to a similar economy which lacks this resource. To
that end, the development path of Norway before and after the discovery
of oil is examined with respect to that of Sweden. The two countries, which
followed almost identical paths until the 1970s, are found to be signifi-
cantly diverging in terms of per capita income after Norway discovered oil.
v
Acknowledgements
vii
viii ACKNOWLEDGEMENTS
1 Introduction 1
Note 6
ix
x Contents
6 Conclusion 159
Contents xi
References 223
Index239
List of Abbreviations
xiii
xiv List of Abbreviations
Fig. 2.1 Crude oil prices 1861–2009 (in 2009 USD per barrel) 18
Fig. 2.2 Proven oil reserves history (thousand million barrels) 21
Fig. 3.1 Hybrid HDI vs. fuel exports, 1970–2009 (with least squares fit) 42
Fig. 3.2 Hybrid HDI vs. ore and metal exports, 1970–2009
(with least squares fit) 42
Fig. 3.3 Hybrid HDI vs. agricultural raw materials exports,
1970–2009 (with least squares fit) 43
Fig. 3.4 Hybrid HDI vs. GDP growth 44
Fig. 3.5 Hybrid HDI vs. quality of government (with least squares fit) 46
Fig. 4.1 ANS rates vs. economic growth (1970–2008) 85
Fig. 4.2 ANS rates vs. per capita income (1970–2008) 86
Fig. 4.3 ANS rates by region (% of GNI) 86
Fig. 4.4 ANS rates by income group (% of GNI) 89
Fig. 4.5 OECD countries, GNS rates versus ANS rates 89
Fig. 4.6 ANS and fuel exports 1970–2008 (with least squares fit) 90
Fig. 4.7 ANS and ore and metal exports 1970–2008
(with least squares fit) 90
Fig. 4.8 ANS and agricultural resource exports 1970–2008
(with least squares fit) 91
Fig. 4.9 ANS and quality of government 101
Fig. 5.1 Produced, natural, and intangible capital estimates,
Norway vs. Sweden (thousand 2000 USD) 124
Fig. 5.2 Real total net capital stock as a percentage of real GDP
in selected OECD countries 125
Fig. 5.3 Estimates of natural capital components, 2000
(thousand 2000 USD) 126
xv
xvi List of Figures
xvii
xviii List of Tables
Introduction
Note
1. See Deacon (2010), Frankel (2010), and van der Ploeg (2011) for detailed
surveys on the resource curse literature.
CHAPTER 2
One of the earliest theories relating natural resource wealth and economic
development is the “staple theory”. Essentially, the theory suggests that
exporting raw materials (natural resources) can induce economic growth.
The idea is rooted in the work of Harold Innis, who first attributed the
development of Canada (in the 1920s and 1930s) to the exportation of its
staple commodities including cod fish, fur, timber, agricultural products,
and minerals to Europe. According to his studies, different staples had dif-
ferent roles in flourishing regional economies in Canada. As such, it was
possible to characterize contemporary Canadian regional development by
the dominant type of staples in each region. Furthermore, Innis (1930)
depicted Canada as being comprised of the heartland and the hinterland
(periphery). The heartland was dependent on the search for and accumu-
lation of staples, which were located in the hinterland, whereas the hinter-
land was the party being exploited in this relationship.
Similarly, Watkins (1963) summarizes the assumptions that charac-
terize the staple theory as follows. Staple exports, which are assumed to
be the leading sector in the economy, are the main sources of economic
growth due to their comparative advantage with respect to the limited
domestic sector. These exports are expected to undergo a process of diver-
sification and have spread effects on the domestic economy. The most
important determinants of these spread effects are the character of the
staples exported, the technology of the industry, demand for factors and
intermediate inputs, the possibility of further processing, and distribution
of income (Watkins 1963: 144–145). These are supposed to affect the
investment opportunities in domestic markets and the extent of diversi-
fication, which correspond to backward, forward, and final-demand link-
ages in Hirschman’s terms (Watkins 1963: 145; Hirschman 1958). The
staple framework resembles the initial stage of Rostow’s (1959) take-off
growth hypothesis in that countries might have to rely on a few raw mate-
rial exports until they reach a stage when they can pursue export-led devel-
opment, industrialize, and diversify production.
However, there are arguments that put forward the idea that staples might
not necessarily be the main sources of economic development. Innis himself
had already mentioned the difficulties emerging with a reliance on staples.
Among those are dependency on international markets, sensitivity to volatili-
ties in demand and prices, and lack of incentives to invest in or improve regional
economies, especially when resources are extracted by outsiders (international
companies) and profits are transferred somewhere else outside the region or
domestic economy. Buckley (1958) proposes to explain Canadian economic
development not only with its staples but also with its productive capacity that
depends upon regional population and labor characteristics, especially after
the 1820s. He argues that the staples theory of economic growth is a regional
approach. It starts with an analysis of the resources of a region and follows
with an analysis of the markets for its staples. It examines capital formation
and population growth induced directly and indirectly by the development of
the resources of the region, whether these effects occur within or outside the
geographical limits of the region. Finally, he emphasizes the range of technol-
ogy relevant to the staples’ production or marketing.
Consequently, Buckley argues that the staple theory is not sufficient to
understand post-1820 Canadian development. When fur was replaced by
wheat and timber and when the French population began to increase in
Canada, other sources of economic growth appeared to be influential as well.
Nevertheless, Bertram (1963) asserts that the staple model continues
to describe the Canadian economy even between 1870 and 1915, and
if differences in production functions are allowed, this approach can be
useful in analyzing economic policy in some under-developed countries.
He criticizes Rostow’s take-off hypothesis in that Rostow relies more on
economic theory than his predecessors and his approach remains very
general and is not applicable to a specific country. Instead, Bertram pro-
poses a model where “the extractive sectors of the economy—forestry,
THEORETICAL AND EMPIRICAL BACKGROUND 9
. . . . . . . . . . . . . . . . . . . .
[Sans date.] — Si je n’ai rien mis ici depuis huit jours, c’est que je
n’ai fait qu’écrire à Marie, écrire un journal intime, feuilles volantes
d’amitié qui s’en iront joncher son lit un beau moment à sa surprise,
et la pauvre malade aura plaisir à cela. Ce sont des riens, mais les
riens du cœur ont leur charme. J’ajoute à cela des livres qu’elle
m’avait prêtés et une carte de mon pays, de ces lieux qu’elle habite
tant par l’âme. Je veux les lui faire voir, et je jouis d’avance de ce
qu’elle va éprouver. Quant aux livres, j’ai peine à les renvoyer ; je ne
me sépare qu’à regret de ce qui fut emporté au départ, pages
empreintes d’adieux, de souvenirs de voyage, lues dans la diligence
de Bourges à Tours, quand je me trouvai assez seule pour pouvoir
lire. Si jamais je les revois, je les relirai encore en mémoire de ce
passé, de cet état d’âme où je me trouvais en regrets, en tristesse,
en craintes, en suspens entre la vie et la mort, roulant sur ce pauvre
malade, que j’allais voir, les pensées les plus déchirantes,
quelquefois les plus opposées ; car on ne peut s’empêcher
d’espérer, quoiqu’on ne voie pas trop où se tient l’espérance. Marie,
Marie, avec quels tristes pressentiments nous nous sommes
quittées ! J’ai toujours en souvenir ce dernier regard qu’elle me fit à
la fenêtre, enveloppée d’une mante noire. Elle m’apparut comme le
deuil en personne…
. . . . . . . . . . . . . . . . . . . .
Je vous aime
Beaucoup moins que mon Dieu, mais bien plus que moi-même.