It is concluded that resource intensity can harm the developmental goals of developing countries through six channels. Three economic factors are: Dutch Disease; volatility of commodity prices; and a decline in educational investments.... more
It is concluded that resource intensity can harm the developmental goals of developing countries through six channels. Three economic factors are: Dutch Disease; volatility of commodity prices; and a decline in educational investments. Three political factors are; rent-seeking, corruption and transparency; undermining of democracy; and civil conflict.
Countries blessed with natural resources believe that they would develop their economy with proceeds received from the extraction of these natural resources. However, when revenue from natural resources starts pouring in, these same... more
Countries blessed with natural resources believe that they would develop their economy with proceeds received from the extraction of these natural resources. However, when revenue from natural resources starts pouring in, these same countries realize that managing proceeds from the natural resources for sustainable economic development is not as easy as anticipated. In fact, some countries with vast amount of natural resources have tended to grow at a slower pace than countries without substantial natural resources.
This paper uses time series data from Syria for the period 1965 to 1997 to test the aid and ¡°Dutch disease¡± hypothesis. We employ the relatively new approach to cointegration, known as the Auto Regressive Distributed Lag (ARDL)... more
This paper uses time series data from Syria for the period 1965 to 1997 to test the aid and ¡°Dutch disease¡± hypothesis. We employ the relatively new approach to cointegration, known as the Auto Regressive Distributed Lag (ARDL) approach. We find no support for this hypothesis neither in the long run nor in the short run. On the contrary, our
Diminishing commodity prices and increasing world interest rates are the two main expected outcomes from slowdown of emerging economies and growth recovery of advanced economies in the post financial crisis. A CGE model is used to analyze... more
Diminishing commodity prices and increasing world interest rates are the two main expected outcomes from slowdown of emerging economies and growth recovery of advanced economies in the post financial crisis. A CGE model is used to analyze commodity shocks in a natural resource country framework with two export oriented resource sectors (gas & oil and minerals) and mainly two emerging tradable sectors (food and manufacturing) with dominant import substitution orientation. Positive shocks of unusual magnitude in the pre-crisis generate strong Dutch disease (DD) effects but also unusual levels of government income, savings and investment, giving rise to a growth opportunity. A negative shock to the mineral sector in the post-crisis does not reverse the growth opportunity as long as the gas & oil sector remains strong. However, policy would be required to help absorb the labor released and in the long-run structural reforms are needed to significantly diminish built-in DD effects in this sector. If in addition a significant negative shock hits the gas & oil sector, the economy can experience negative growth. Having a stabilization fund would help in this scenario, but to avoid it altogether sector policy is more important. Additionally, a DSGE model with tradable/non-tradable sectors and skilled/unskilled savers/not savers workers is calibrated to analyze the conditions under which capital flight might occur under increasing world interest rates in the post-crisis. These conditions require a significant degree of macroeconomic deterioration which is not being observed, but point to some key variables to follow, such as the level of net external assets held by the country.
The idea of scaling up aid to developing countries has increased fears of “Dutch Disease” in the donor community and recipient countries. Through its impact on inflation and the exchange-rate, aid could slow down growth and human... more
The idea of scaling up aid to developing countries has increased fears of “Dutch Disease” in the donor community and recipient countries. Through its impact on inflation and the exchange-rate, aid could slow down growth and human development, undermining the aims of donors and recipients. By using the basic model of Dutch Disease, adjusting it to the circumstance of developing countries and taking a medium-term view, we explain how it is possible to avoid Dutch Disease. Important factors determining the impact seem to be: the spending pattern of aid, the amount of imports financed with aid and the coordination between the fiscal and monetary authorities. As the IMF is one of the most important participants in the discussion around this topic, we also clarify the specific terms this institution uses to discuss this sort of topics. The paper ends with referring to the fact that understanding the problem is one thing, taking these economic decisions on a political level may in certain ...
My work focuses on "the natural resource trap" as Collier raises, linking it with Robert Putnam’s culturalist pose. Colllier’s text shows from a systems perspective that poor countries with significant income from their... more
My work focuses on "the natural resource trap" as Collier raises, linking it with Robert Putnam’s culturalist pose. Colllier’s text shows from a systems perspective that poor countries with significant income from their natural resources neither develop nor adhere to genuine democracies. They rather stagnate, or go through periods of ups and downs. One of the main reasons is that these countries do not encourage working culture because it is more attractive to participate in the bidding for, and living of, this easy wealth. In the best case, the policy evolves to democratic forms, and the tendency is to populism, alienating cultural factors essential for development. These countries - and Argentina is one of them - have two problems to solve: the first is to get the most value for their resources, which does not happen due to corruption and failure of political bargaining. The second problem is how to spend the proceeds well, without squandering them. The generous distribution of these resources is what allows people to consume without producing. The interventionist distributionism is installed, leaving a trail of cultural deformation and spurious interests from which it is difficult to recover. Can we ensure that natural resources’ rents are an opportunity to really generate inclusive growth?
This note looks at so-called Dutch disease, a phenomenon reflecting changes in the structure of production in the wake of a favorable shock (such as a large natural resource discovery, a rise in the international price of an exportable... more
This note looks at so-called Dutch disease, a phenomenon reflecting changes in the structure of production in the wake of a favorable shock (such as a large natural resource discovery, a rise in the international price of an exportable commodity, or the presence of sustained aid or capital inflows). Where the natural resources discovered are oil or minerals, a contraction or stagnation of manufacturing and agriculture could accompany the positive effects of the shock, according to the theory. The note considers channels through which such natural resource wealth can affect the economy. It also focuses on the development implications of Dutch disease, particularly the potential negative effects related to productivity dynamics and volatility; and concludes with a summary of possible policy
responses, including the mix of fiscal, exchange rate, and structural reform policies.
We propose a structural dynamic factor model of a small commodity-exporting economy, using Canada as a representative case study. Combining large panel datasets of the global and domestic economies, sign restrictions are used to identify... more
We propose a structural dynamic factor model of a small commodity-exporting economy, using Canada as a representative case study. Combining large panel datasets of the global and domestic economies, sign restrictions are used to identify relevant demand and supply shocks that explain volatility in real commodity prices. We quantify their dynamic effects on a wide variety of Canadian macro variables. We are able to reproduce all the main stylized features at business-cycle frequencies documented in the literature on this type of economies. These include a Dutch disease effect which has proven hard to find in empirical studies. (JEL E32, F14, F32, F43, F44, Q02, Q33)
The longstanding dominance of the extractive industry in Azerbaijan has created a situation that can be understood with the help of the Dutch disease model. The oil boom period (2008-2011) brought high levels of mineral revenue. The... more
The longstanding dominance of the extractive industry in Azerbaijan has created a situation that can be understood with the help of the Dutch disease model. The oil boom period (2008-2011) brought high levels of mineral revenue. The chronic overvaluation of the national currency during the oil boom, coupled with an appreciation of real wages in the mining industry that outperformed other sectors-particularly the manufacturing sector-reflect the first two symptoms of the phenomenon. In Dutch disease economies, the increased share of the services sector in the output (the third symptom of the disease) during unrecovered manufacturing (the fourth symptom) leads to a major slowdown in industrial production-also known as de-industrialization. Azerbaijan has suffered from unregulated investments, untargeted policies, and opportunistic behavior that has meant that mineral revenue has been spent rather than saved or redirected toward rebuilding the country's industrial heritage. This study evaluates the presence of Dutch disease in Azerbaijan using the available statistical data and through comparisons with other resource-rich countries to outline policy recommendations.
This note looks at so-called Dutch disease, a phenomenon reflecting changes in the structure of production in the wake of a favorable shock (such as a large natural resource discovery, a rise in the international price of an exportable... more
This note looks at so-called Dutch disease, a phenomenon reflecting changes in the structure of production in the wake of a favorable shock (such as a large natural resource discovery, a rise in the international price of an exportable commodity, or the presence of sustained ...
Although the core model of the Dutch Disease makes unambiguous predictions regarding the negative effect of a resource boom on a country’s manufacturing exports, the empirical literature that has followed has not clearly identified this... more
Although the core model of the Dutch Disease makes unambiguous predictions regarding the negative effect of a resource boom on a country’s manufacturing exports, the empirical literature that has followed has not clearly identified this effect. I attribute this to the failure of the existing literature to combine enough data to produce a sufficiently powerful and exogenous test. I will use the World Trade Database to systematically test this hypothesis in a gravity model of trade. World energy prices are used to bypass issues of endogeneity regarding primary exports. A one percent increase in world energy price is estimated to decrease a net energy exporter’s real manufacturing exports by almost half a percent. Similarly, after instrumentation, a one percent increase in an energy exporting country’s net energy exports is estimated decrease the country’s real manufacturing exports by 8 percent. The corresponding confidence intervals are tight and these results are shown to be quite r...
The Organisational Side of GIS This book seeks to illuminate the organizational and social dimensions of Global Information Systems. It provides a broad and historical perspective on the developments of the geographic information society... more
The Organisational Side of GIS This book seeks to illuminate the organizational and social dimensions of Global Information Systems. It provides a broad and historical perspective on the developments of the geographic information society and on its connection to the information technology ...
The aim of this essay is a preliminary attempt to discuss the notion of Industry 4.0 in relation to economic development of countries. The essay seeks to address various aspects of Industry 4.0 as a continued rollout of Industry 3.0. It... more
The aim of this essay is a preliminary attempt to discuss the notion of Industry 4.0 in relation to economic development of countries. The essay seeks to address various aspects of Industry 4.0 as a continued rollout of Industry 3.0. It focuses, more precisely, on inserting the notion of the Industrialisation 4.0 into economic development theories, outlining the theories of economic development.
After defining the phenomena of economic growth, sustainable development, technological progress and industrialisation, we touch upon the question of whether Industrialisation 4.0 is for developing countries an opportunity to grow or rather a danger. We also discuss the problem of why some developing countries manage to outperform the leaders and others do not.
Finally, we analyse the economic development of a country based on its statistics applying the theoretic points developed previously. The country to be analysed is the Russian Federation. Starting by statistical evidence, we discuss the historical perspectives touching upon the issues of the country’s economic development. Applying the concepts of Industry 4.0, we offer different scenarios depending on whether the country embraces innovation or not.
In this essay, we reference to different kinds of sources in order to prove our idea. The textbooks by Todoro and Smith as well as Weil are used. We also utilise the UN and UNDP materials to outline certain ideas. Various online databases (OECD, World Bank etc.) provide the statistics for the author’s opinion.
This note looks at so-called Dutch disease, a phenomenon reflecting changes in the structure of production in the wake of a favorable shock (such as a large natural resource discovery, a rise in the international price of an exportable... more
This note looks at so-called Dutch disease, a phenomenon reflecting changes in the structure of production in the wake of a favorable shock (such as a large natural resource discovery, a rise in the international price of an exportable commodity, or the presence of sustained ...
Plans and projects based on fossil energy sources to become an epicenter on global energy logistics are short lived in long term and "Fossil Energy Obsession" is the biggest handicap on it. Economies' addiction to fossil energy sources... more
Plans and projects based on fossil energy sources to become an epicenter on global energy logistics are short lived in long term and "Fossil Energy Obsession" is the biggest handicap on it. Economies' addiction to fossil energy sources known as coal, oil and natural gas are causing them to ignore. The importance of the renewable energy sources we define this as "Fossil Energy Obsession". Maintaining this behavior in the long term both in Turkey and Globally, should be regarded as one of the biggest threats on Turkey's aim to become the main base in logistics and some urgent action strategies should be created to counter it. The purpose of this study is Turkey aim to become an epicenter in the context of global energy logistics and alternative renewable energy sources that it examines the along with factors of "Resource Curse", "Dutch Disease", Kyoto Protocol and "Fossil Energy Obsession".
This paper examines how macroeconomic policies can be managed to accommodate a large inflow of foreign aid to combat the HIV/AIDS epidemic and still maintain macroeconomic stability. Because of the daunting scale of this epidemic, funds... more
This paper examines how macroeconomic policies can be managed to accommodate a large inflow of foreign aid to combat the HIV/AIDS epidemic and still maintain macroeconomic stability. Because of the daunting scale of this epidemic, funds need to be disbursed urgently in order to contain its spread, yet some economists worry that rapidly scaling up foreign assistance for this purpose will cause inflation and appreciation of the real exchange rate. If such effects occur, they could impair a country's international competitiveness and endanger its growth prospects. However, this paper maintains that such effects can be minimized if governments and central banks coordinate fiscal, monetary and exchange rate policies. If they do, they should be able to both 'spend' aid in order to finance larger government programmes and 'absorb' aid in order to import more real resources. Often, governments that receive foreign aid neither spend nor absorb it fully, defeating the...
This work is devoted to one of the important tools of macroeconomic policy – the stabilization fund. This phenomenon is particularly relevant for natural resources reach countries, since inept spending of huge additional revenues from the... more
This work is devoted to one of the important tools of macroeconomic policy – the stabilization fund. This phenomenon is particularly relevant for natural resources reach countries, since inept spending of huge additional revenues from the export of natural resources may lead to unpredictable consequences, the negative effect of which would negate the positive impact of resource revenues.
The paper examines the main macroeconomic aspects of “resource curse” hypothesis. The paper also proposes the recommendations on economic strategy of the government for minimizing the negative effects of “resource curse”. One of these strategies is the creation of a special fund for the accumulation of "extra" money coming into budget from export of natural resources. Such funds in various resources-exporting countries are called differently . In Russia it's Stabilization Fund .
The special section of the paper is devoted to the Stabilization Fund of the Russian Federation, focuses on the causes of its formation, the basic strategy of accumulation , the basic functions and the expected development strategy and transformation for the future. The final section of the paper uses the model presented in the work of Da Costa and Olivo (2008) to analyze the presence of oil and fiscal dominance in the Russian economy as well as the relationship between monetary aggregates and inflation in 1999 – 2007.
Using forest concentration data from Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, South Carolina, and Virginia, this paper test whether or not the low-level of economic growth is related to forest resource intensity... more
Using forest concentration data from Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, South Carolina, and Virginia, this paper test whether or not the low-level of economic growth is related to forest resource intensity and Dutch Disease. Specifically, cross sectional data from 815 counties are used to evaluate how changes personal income growth is affected by concentration of forestry resources, government
