Natural Resource Booms Research Articles

The big push, natural resource booms and growth

A simple application of big-push reasoning suggests that natural resource booms can be important catalysts for development in poorer countries. In this paper we present evidence from seven Latin American countries that natural resource booms are sometimes accompanied by declining per-capita GDP. We present a model with natural resources, increasing returns in the spirit of big push models, and expectations to clarify some of the reasons this may happen.

A Role-Playing Exercise for Development and International Economics Courses

A role-playing exercise is described in which students play the roles of various ministers advising the president in the resolution of the macroeconomic problems that arise with a natural resource boom. A framework for role playing is presented that has applications beyond this single issue.

A Dynamic Specific-Factors Model of International Trade

In a dynamic economy land and capital serve not only as factors of production but as assets which individuals use to transfer income from working periods to retirement. Changes in the terms of trade and in the endowments of fixed factors do not necessarily have the same effects on factor prices and on the composition of output as they do in a static framework. Changes in these variables affect both total savings and the amount of savings that is diverted toward investment in capital. Results derived from the traditional specific-factors model are more likely to emerge when the sector using land as a factor of production has a higher labor share than the sector using capital. In this case the land-using sector dominates factor markets more than asset markets. Once the roles for land and capital as assets are recognized, the possibility of natural resource booms that reduce steady-state welfare arises. At the same time, an increase in population can raise steady-state welfare.