Resource Richness and Economic Development in Newly-Industrialized Economies: East Asia versus Latin America

Abstract

Natural-resource richness was historically regarded as an obvious source of advantage for economic development. In the framework of traditional staple theory (see Drache, 1995, for Innis’s essays; also see Watkins, 1963), resource richness is treated as an ignition key to initiate economic development. Recent research on the economic development of the US economy in the nineteenth century and the early twentieth century has also found a positive impact of resource richness on the growth performance. Since the end of the Second World War, however, there has been increasing empirical evidence that richness in natural resources seems adversely to affect economic growth (see Gelb and associates, 1988; Michaely, Papageorgiou and Choksi, 1991, p. 268; Auty, 1993; and Sachs and Warner, 1995, for example). There is particularly a clear contrast in development performance between resource-poor Asian newly-industrialized economies (NIEs) and resource-rich Latin American newly industrialized countries (NICs).KeywordsForeign Direct InvestmentPolicy ReformForeign CapitalImport SubstitutionResource RichnessThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.