Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/117961
Authors: 
Papyrakis, Dlisraios
Gerlagh, Reyer
Year of Publication: 
2004
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 87.2004
Abstract: 
We study the negative correlation between natural resource-abundance and long-term income focusing on the savings-investment channel. We first present empirical evidence on this channel and then develop an OverLapping-Generations (OLG) model to study the issue. In this model, savings adjust downwards to income from natural resources, and investment in capital contributes to knowledge creation, a feature based on endogenous growth theory. We analyze the link from resource income future income through savings and investment. Natural resources have two counteracting effects on income. In the short term, resource wealth augments income, but in the long-term, it decreases income through a crowding-out effect on capital and knowledge. We discuss different scenarios under which the resource curse is most likely to take place.
Subjects: 
Natural resources
Growth
Investment
OLG models
JEL: 
E22
O13
Document Type: 
Working Paper

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