Absorption capacity and Natural Resource Curse

Arsham Reisinezhad (1, 2)

1 PSE - Paris School of Economics
2 PJSE - Paris Jourdan Sciences Economiques

This paper investigates the impact of absorption capacity (i.e. the level of non-traded capital goods such as infrastructure and human capital) on the intensity of the natural resource curse. Using panel data for 105 countries over the period 1975-2014, I construct two indexes to proxy absorption capacity among countries. A growth regression model, estimated by IV-2SLS technique, shows that the natural resource curse is more intensive in countries with more absorption capacity constraints. Furthermore, based on the idea that some sorts of capital goods (e.g. infrastructure and human capital) can not be redeployed in major countries and they must be produced domestically (i.e. absorption capacity constraints), I put forward a simple two-sector framework, in line with Vander Ploeg and Venables (2013), to clarify the empirical finding

Mots clés: Resource-dependence; Non-traded capital goods; Absorption capacity

Domaines: Economies et finances

Arsham Reisinezhad. Absorption capacity and Natural Resource Curse. 2020. ⟨halshs-03012661⟩