FEEM working papers "Note di lavoro" series
2004 .062

Resource-Abundance and Economic Growth in the U.S.

Authors: Elissaios Papyrakis, Reyer Gerlagh
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Journal
Keywords: Natural resources,Growth,Transmission channels
JEL n.: C21,O13,O51,Q33
JEL: European Economic Review
Pages: Vol. 51, No. 4, pp. 1011-1039
Date: 05/2007


It is a common assumption that regions within the same country converge to approximately the same steady-state income levels. The so-called absolute convergence hypothesis focuses on initial income levels to account for the variability in income growth among regions. Empirical data seem to support the absolute convergence hypothesis for U.S. states, but the data also show that natural resource-abundance is a significant negative determinant of growth. We find that natural resource abundance decreases investment, schooling, openness, and R&D expenditure and increases corruption, and we show that these effects can fully explain the negative effect of natural resource abundance on growth.

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