Globalization and natural resource abundance: is export diversification possible? : a comparison of export composition in Chile and Norway, 1870-2017

In the context of exports expansion, we want to evaluate the ability of natural resource-abundant countries to reduce their dependence on natural resource exploitation in the long run. Specifically, we measure exports diversification in Chile and Norway in order to measure how they responded to global markets during the First and Second Globalizations. Both countries started from similar levels of economic development in the mid-nineteenth century and grew importantly until the Great Depression. However, our detailed study of exports composition shows critical differences in the role of natural resources in export performance and industrial expansion. In the case of Chile, our analysis highlights a clear re-primarization based on one single product whose exploitation did not require heavy knowledge investments. By contrast, Norway was able to combine exports of raw natural resources, with a broader base of natural resource-based products and even to increase its technological manufactures exports. Although these differences are not the only explanation, they seem to be crucial to understand the divergent effect that the Great Depression had, and the subsequent economic divergence that took place between both countries.