The distribution and abundance of natural resources vary from one region to another. Does the abundance of natural resources in a particular area translate into enhanced economic growth for that region? The aim of this paper is to conduct a review of an article by Jeffrey Sachs and Andrew Warner titled “The curse of natural resources” that touches on this subject. The review will begin with a brief discussion of the problem or issue addressed in this article. This will be methodology and the data used in the article will then be discussed. The main findings or conclusions made by the authors of this article will then be discussed briefly. The other section that will touch on is other articles that have cited the contents or information of this article. Finally, an overall assessment of the significance, relevance, usefulness and readability of the article will be done.
What are the implications of natural resources abundance on the economic growth of a country? Sachs and Warner attempt to answer this problem by assessing the credibility or authenticity of past research that seems to indicate that those countries that are abundantly blessed with vast natural resources experience slower economic growth than their counterparts who have fewer natural resources. This is referred to as “curse of natural resources."
This research is secondary in nature and adopts the methodology of a systematic review. The authors conduct an extensive and systematic review of literature supporting the notion of the “curse of natural resources”. The majority of the literature reviewed comprises of empirical studies that examine the relationship between natural resources distribution and economic growth in various countries across the globe. To answer the pertinent question on this issue the review is subdivided into several subsections that explore different aspects the issue. In fact, the two primary subsections answer the questions of whether the curse really exists and factors that explain this curse. Some of the data incorporated into this research include GDP rates, log investment rates, exports and natural resource abundance.
The conclusion derived by the authors of this article says that there is little direct evidence indicating that omitted climatic and geographic variables explain the curse of natural resources. The authors also conclude that some bias exists due to other unobserved growth deterrents. The main conclusion however is that countries that are resource abundant tend to be high price economies and consequently, they miss out significantly on exported led growth and this is perhaps why he “curse of natural resources” appears real.
This article has been cited by very many articles that touch on the relationship between natural resources and economic growth. Mehlum et al. (2006) for example use the results of the study in an article titled “Institutions and the resource curse” to show once again the inverse proportionality of natural resources and economic growth. The article is also cited by Van der Friedrick (2011), in the article “Natural resources: Curse or blessing?” where the findings of the effect of naturals resource and economic growth is used to show that natural resources abundance can be both a blessing and a curse.
This article is very significant to the study of natural resource economies because as shown, it answers one of the most pertinent questions about natural resources: do their abundance affect a region’s economic growth? It is perhaps of more use to such countries with high economic abundance as it can help them to develop strategies against this “curse”. The systematic review is conducted exemplary and is articulated in simple, clear language, therefore, enhancing is overall readability.Acknowledgement
I acknowledge that all the information contained in this review has been penned down by myself without the use of any outside help. All the materials utilized in the review are listed down in the works cited section of the paper.
Kronenberg, Tobias. "The curse of natural resources in the transition economies*." Economics of transition 12.3 (2004): 399-426.
Mehlum, Halvor, Karl Moene, and Ragnar Torvik. "Institutions and the resource curse." The Economic Journal 116.508 (2006): 1-20.
Sachs, Jeffrey D., and Andrew M. Warner. "The curse of natural resources." European economic review 45.4 (2001): 827-838.
Van der Ploeg, Frederick. "Natural resources: Curse or blessing?" Journal of Economic Literature (2011): 366-420.