Re-evaluating the impact of natural resources on economic growth

In this study we re-evaluate the impact of natural resources on economic growth. The reassessment is based on a growth model where, using panel-data analysis, natural-resource variables (geographically diffused and concentrated) affect the efficiency gains of labour and capital in production. We find an overall positive effect on growth arising from the increase in capital efficiency associated with concentrated resources, exactly the kind of resources that explain the resource curse in recent cross-section studies. We detect a negative effect of concentrated resources on labour efficiency only when either the resource proxies are unadjusted for re-export distortion (even with a fixed institutional quality, contrary to cross-section studies), or both the fixed country and time effects are not considered after the referred adjustment. Our results also dismiss a negative effect of the adjusted diffuse resources measure on capital efficiency if we assume a constant institutional quality, and fixed country and time effects.