Resource Abundance and Its Impact on Latin American Economic Growth

Karen I. Poppe A.^1,

¹School of Economics and Business, Southeast University, Nanjing, China

Cite this paper:
Karen I. Poppe A.. Resource Abundance and Its Impact on Latin American Economic Growth. Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport. 2016; 4(3):54-70. doi: 10.12691/jbe-4-3-3

Abstract

Do abundant resources have any effect on the economic development of countries or are them the cause of a resource curse? The controversy generated about this research area is still active in many analytical frameworks. This paper makes a thorough empirical research on the relationship between resource abundant countries in Latin America and their economic growth. Scholars have found different arguments to argue about the resource curse existence and literature about the resource abundance and the most representative variables that can have effect on it, they all englobe general variables such as production, openness and investment as the most influent ones on the issue. The paper focuses on Latin American countries which are resource endowed and analyze their economies’ behavior to find out the relevant issues that put them in their current position on the world. In general terms, the findings reveal that after controlling the relevant variables such as labor force, production, openness, and investment the relationship and influence of the primary goods exports on the economy is not as significant as it was though, especially during the last 25 years, when there has been more globalization, industrialization, technologic growth, and other factors that could have changed the economies in Latin American countries. The results showed that the variables related with trade, exports or Natural Resource production had less impact in the economy lately; however, variables very related with investment, resource allocation, income distribution and others directly related with governmental decisions have more impact in Latin American economies, since problems such as corruption and bureaucracy have been causing major issues throughout the history. Natural resource endowment for Latin American countries had lead these economies to work focused on their production; nonetheless, in recent years, evidence does not show the existence of a “resource curse” but a poor governmental management which has taken Latin American economies to challenging economic episodes during the course of the history.

Keywords:
resource curse natural resources resource endowment resource based exports

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