Simple exports also matter : knowledge creation and growth in natural resource abundant countries

Abstract

There is a great deal of pessimism towards natural resource oriented development in modern developmental literature but little is made of the countries which thrive in the face of resource abundance. This paper models the nature of innovation in resource abundant countries and sets about testing for the existence of a special club of successful resource abundant countries. The model shows that policy which is biased against the resource sector will lead to a suboptimal static welfare outcome and that the sustainability of resource sector output will decline in the presence of such policy. The empirical analysis of existing literature alludes to a possible misspecification of resource curse models and indicates that the possibility of a special club of resource abundant countries is possible. However, testing is constrained by lack of adequate data.