On Natural Resource Abundance And Economic Growth

In the rise of Western Europe and its overseas offshoots, natural resources play a very important role. However, since World Warâ…¡, many resource-rich countries failed to achieve economic development, even though their primary products export exhibited booming. Economists use "resources curse" to describe this paradox between abundant natural resources and economic growth. Although arousing a lot of disputes, "resources curse" has been recognized by the academic circles, the World Bank and the International Monetary Fund and other international agencies, and private non-governmental organization. At the same time, "resource curse" also has stirred up extensive researches.First of all, this article presents a comprehensive review about the relationship between abundant natural resources and economic growth since A.D.1000. In this paper, this historical period is divided into three "center - periphery" patterns. At the first "center - periphery" pattern, Western European countries, such as Dutch, Britain, France, etc., which are the "periphery" countries, by trading natural resource-intensive products with the "center" Muslim countries, achieved a considerable economic development. Certainly, the abundance of natural resources is also vital for the subsequent Industrial Revolution taking place firstly in the United Kingdom. In the second "center - periphery" pattern, the United States, Canada, Australia and other Western European offshoots, though the trade of natural resource-intensive products with Western Europe, gained significant development, and eventually completed pattern conversion from "periphery" to "center".However, in the third "center -periphery" pattern, resources-rich countries, particularly developing countries, their economic growth was far from satisfactory in comparison with resources-poor countries, which is seemingly cursed by abundant natural resources.Secondly, this paper constructs a mathematical model to analyze the relationship between natural resources abundance and economic growth. Our analysis shows that, from the perspective of direct effects, natural resource is a basic product factor. Under the same conditions, the country with abundant natural resources must have a higher per capita income. From the perspective of indirect effects, abundant natural resources crowds out the manufacturing sector, and induces "Dutch disease". The high profit of Natural resources sector tends to induce the rent-seeking, and hinders institution innovation. In the present political system, the frequent changing price makes the sustainable development of natural resources sector faced with great threat. In a quality-poor institution country, abundant natural resources tend to produce a friendly resources predator equilibrium, which hinders the development of the manufacturing industry and the cultivation of entrepreneurial talent. At last, putting together these entire factors produces the "resource curse" results.Finally, this paper uses cities panel data in China in order to analyze relationship between the resource abundance and economic development. Our study found that resource abundance and economic growth is not a simple negatively linear relation, but a reverse U-shaped relation. In the non-resource-based cities, resource endowment is correlated positively with the growth rate of per capita GDP; in the resource-based cities, resource endowment is correlated negatively with the growth rate of per capita GDP. At the same time, we found that in the central cities and western cities, resource endowment and the growth rate of per capita GDP exhibit the reverse U-shaped relationship. However, in coastal cities, resource endowments and the growth rate of per capita GDP exhibit a J- shaped relationship. The "resource curse" did not occur in the coastal cities. Finally, our studies show that resources abundance, through reducing human capital investment, weakening non-public economic sectors, depressing FDI inflows, reducing R&D spillovers, impedes the economic development of cities in China.This paper is divided into seven chapters. The first chapter is introduction, which explains study background, significance, basic content and method, etc. The second chapter is literatures Review, which mainly introduces the research achievements and deficiencies. The third chapter mainly summarizes influence of natural resources for economic growth since 1000 A.D. The fourth chapter and the fifth chapter construct mathematical models to analyze the direct and indirect influence of natural resources on economic growth. The sixth chapter, through the empirical methods, discusses natural resources abundance how to affect economic growth of China cities. The seventh Chapter, on the basis of summing up this paper, puts forward the future direction of the research.