Ecole Centrale de Marseille
Technopole de Château Gombert
38 rue Joliot-Curie
This paper analyzes the behavior of cross-country growth rates with respect to resource abundance and dependence. We reject the linear model that is commonly used in growth regressions in favor of a multiple-regime alternative. Using a formal sample-splitting method, we find that countries exhibit different behaviors with respect to natural resources depending on their initial level of development. In high-income countries, natural resources play only a minor role in explaining the differences in national growth rates. On the contrary, in low-income countries, abundance seems to be a blessing but dependence restricts growth.
The economic literature has shown that some countries may be trapped in what is called an ”environmental poverty trap”: poor longevity implies little maintenance of the environment, which leads to high levels of pollution that in turn keeps life expectancy low. Since life expectancy is an important determinant of saving, these economies may not be able to grow. This article aims to provide policy recommendations to improve both environmental quality and growth in the context of debt consolidation. Notably, it studies how public debt and public maintenance may be used to escape from the environmental poverty trap. A welfare analysis is then undertaken to show that public debt is an instrument which helps to solve the capital over-accumulation problem and to achieve environmental objectives.
We here provide some evidence that the growth regression models used to test the resource curse should correctly account for heterogeneities between countries. We reproduce the results in a well-known article by Brunnschweiler and Bulte (2008) and then test their robustness. We show that the impact of resource dependence on growth strongly depends on the way in which we model heterogeneity. We find evidence of the resource curse in low-income countries.