Abstract
Abstract We study the effects of energy innovation and policy on income growth. Between 1997 and 2014, US corn, soybean, and cotton production almost fully converted to genetically modified crops. Starting around 2007, improved tight oil and shale gas technologies turned the declining US fossil fuel production into a booming industry. We study the effects of these two resource technology revolutions on US state income. We find that the shale revolution increased income in states abundant in oil and gas resources. States dependent on agricultural production also saw an increase in income, which we, however, attribute not only to the GM innovation but to a demand increase brought by the Energy Policy Act of 2005.
Highlights
During the late 1990s and mid 2000s, two resource technology revolutions, the largescale introduction of genetically modified crops and the development of tight oil and shale gas, substantially increased production in the respective resource sectors
In this paper we revisited the relationship between resource abundance and economic growth in the United States at the state level
Our study contributes to a literature that shows mixed and inconclusive answers on the question whether natural resource abundance impedes or enhances economic growth
Summary
During the late 1990s and mid 2000s, two resource technology revolutions, the largescale introduction of genetically modified crops and the development of tight oil and shale gas, substantially increased production in the respective resource sectors. The latter study uses personal income data at the county level over the period 1980-2005, and confirms that mineral resource abundance decreases growth, even after controlling for education levels, poverty rates, population density, and age distribution They point to commodity price movements leading to low growth rates in the mining sector as one of the causes for the local resource curse.4 Jacobsen and Parker (2016) analyze the impacts of resource booms on employment, wages and personal income in US counties, using variation in oil prices and location of oil and gas reserves to establish causality. James (2017) considers the effects of real oil price booms on education spending over the period 1970-2008, and he finds a significant positive impact on the provision of public education and no effect on private education spending.5 We contribute to this literature as we consider both supply and demand shocks, and consider three resource sectors separately: oil&gas, agriculture, other mining.
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