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Botta, Alberto
Year of Publication: 
Series/Report no.: 
Quaderni di Dipartimento, EPMQ, Università degli Studi di Pavia 207
The recent increase in the world price of primary commodities has brought back to the forum the issue of the role of natural resources in the development process. Whilst improving terms of trade may help developing countries to grow faster in the short run, doubts still exist on the long-run consequences of natural resource booms. In this work, we present a structuralist two-sector model on economic growth, manufacturing development and the Dutch disease. We describe a multiple equilibria scenario, in which manufacturing development and labour productivity dynamics feed back each other. Natural resource booms, by affecting investment decisions and modifying the productive structure of backward economies, may set destabilising forces. De-industrialization processes may take place, shifting and confining developing countries in underdevelopment traps. Public intervention in the economic sphere may be required in order to free the economy from the poverty trap. Both short-run macro policies and long-run development strategies may play a role in feeding economic development.
Structural Change
Manufacturing Development
Dutch Disease
Document Type: 
Working Paper

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