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October 2003
Prepared for the Conference on Sector Reform in Latin America Stanford Center for International Development November 13-15, 2003
Recent studies assert that natural resource abundance (particularly minerals) has adverse consequences for economic growth. This paper subjects this “resource curse” hypothesis to critical scrutiny. Our central point is that it is inappropriate to equate development of mineral resources with terms such as “windfalls” and “booms.” Contrary to the view of mineral production as mere depletion of a fixed natural “endowment,” we show that so-called “nonrenewable” resources have been progressively extended through exploration, technological progress, and advances in appropriate (often country-specific) knowledge. Indeed, minerals constitute a high-tech knowledge industry in many countries. Investment in such knowledge should be seen as a legitimate component of a forward-looking economic development program.