An investigation of the competitiveness hypothesis of the resource curse

LA Serino

Research output: Working paperAcademic

Abstract

In this paper I investigate the competitiveness explanation of the resource
curse: to what extent slow growth in primary producer countries is related to
the properties of this pattern of trade specialization. To address this hypothesis
that has not been adequately explored in the literature, I estimate cross-country
and system GMM panel data regressions, using a sample of 49 developed and
developing countries.
The empirical analysis explores most hypothetical explanations of the
resource curse using a sensitivity approach and alternative trade specialization
measures, elaborated with long-term trade disaggregated data, what constitutes
an innovation regarding previous empirical work. The main findings of the
paper are: i- that primary specialization hampers growth by reducing intraindustry trade and the dynamism of export demand, and ii- that it is the
specialization in natural resource products with no or limited processing the
one constraining economic growth, but not the specialization in industrialized
resource products. Both facts support the competitiveness hypothesis of the
resource curse and suggest that this growth paradox is linked to the limitations
of resource abundant countries to diversify their tradable sector, and engage in
the trade of products that facilitate the achievement of static and dynamic
economies of scale.
Original languageEnglish
Place of PublicationDen Haag
PublisherInternational Institute of Social Studies (ISS)
Number of pages39
Publication statusPublished - Feb 2008
Externally publishedYes

Publication series

SeriesISS working papers. General series
Number455
ISSN0921-0210

Bibliographical note

JEL Classification: F43, O13, O47

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