DP9318 The implications of natural resource exports for non-resource trade
|Author(s):||Torfinn Harding, Anthony J Venables|
|Publication Date:||January 2013|
|Keyword(s):||Dutch disease, exports, imports, natural resources, resource curse, trade|
|JEL(s):||E21, E62, F43, H63, O11, Q33|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=9318|
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.