Natural resources fund types and capital accumulation: A comparative analysis

Abstract

The growing interest in resource funds of resource-rich countries, especially oil-producing countries, has been a focus of empirical research, questioning the relevance of such funds. Several countries established savings/stabilization or investment funds, while others have not. This paper is the first to focus on the comparative analysis of effects of resource fund types on the accumulation of capital and economic growth in resource-rich countries. Using a panel of 23 resource-rich countries worldwide over 2000–2014 and several econometric methods, robust evidence is observed for countries with stabilization/savings funds experiencing greater development of human capital and accumulation of tangible assets than those with investment funds or without resource funds. This finding is particularly robust for oil-producing countries, where having no resource funds is also associated with higher growth rates compared to other cases (i.e., investment, and savings/stabilization funds). The political implications are profound in the context where certain countries are in the process of permanently changing their fund types, while others are in the process of establishing funds.