The (Non) Effect of Natural Resource Dependence on Capital Accumulation in Latin America

Abstract

In a simultaneous model of human and physical capital accumulation for 18 Latin American countries from 1975 to 2004, we show that overall resource dependence is not significantly related to physical and human capital. Disaggregating the natural resource variable into subcategories, we find that petroleum export dependence is associated with higher physical capital and lower human capital, while agricultural export dependence is associated with lower levels of physical capital. All of these effects are quantitatively small, however, casting doubt on the idea that the region suffers from a resource curse in terms of capital accumulation.