With Exhaustible Resources, Can A Developing Country Escape From The Poverty Trap?
Journal article: This paper studies the optimal growth of a developing non-renewable natural resource producer. It extracts the resource from its soil, and produces a single consumption good with man-made capital. More- over, it can sell the extracted resource abroad and use the revenues to buy an imported good, which is a perfect substitute of the domes- tic consumption good. The domestic technology is convex-concave, so that the economy may be locked into a poverty trap. We show that the extent to which the country will escape from the poverty trap depends, besides the interactions between its technology and its impatience, on the characteristics of the resource revenue function, on the level of its initial stock of capital, and on the abundance of the natural resource.
Author(s)
Cuong Le Van, Katheline Schubert, Tu-Anh Nguyen
Journal
- Journal of Economic Theory
Date of publication
- 2010
Keywords JEL
Keywords
- Optimal growth
- Non-renewable resource
- Convex-concave technology
- Poverty trap
- Resource curse
Pages
- 2435-2447
URL of the HAL notice
Version
- 1
Volume
- 145