Foreign Resource Inflows, Saving, and Growth.

This paper surveys aspects of the empirical and theoretical debate over the effects of foreign resource inflows on the national saving, investment, and growth of developing countries. The paper suggests a methodology for systematically studying the effects of resource inflows, based on standard optimal growth models modified for consistency with key empirical macro relations. A fairly robust normative implication even of representative-agent optimal consumption models is that much if not most of extra permanent resources should be consumed rather than invested.