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Title: The implications of natural resource exports for non-resource trade

Author(s): Torfinn Harding and Anthony Venables

Publication Date: January 2013

Keyword(s): Dutch disease, exports, imports, natural resources, resource curse and trade

Programme Area(s): International Trade and Regional Economics

Abstract: Foreign exchange windfalls such as those from natural resource revenues change non-resource exports, imports, and the capital account. We study the balance between these responses and, using data on 41 resource exporters for 1970-2006, show that the response to a dollar of resource revenue is, approximately, to decrease non-resource exports by 75 cents and increase imports by 25 cents, implying a negligible effect on foreign saving. The negative per dollar impact on exports is larger for countries which have good institutions and higher income levels. These countries have a higher share of manufacturing in their non-resource exports, and we show that manufactures are more susceptible than other products to being crowded out by resource exports.

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Bibliographic Reference

Harding, T and Venables, A. 2013. 'The implications of natural resource exports for non-resource trade'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9318