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The resource curse and China's worldwide demand for natural resources

Massi, Eliza LU (2010) NEKM01 20101
Department of Economics
Abstract
During the past two decades several studies pointed out the contradiction between abundance of natural resources and its negative impact on economic growth and development. This paradox has been widely observed and documented throughout the development literature. In this context, China’s increasing demand for natural resources and consequent growing trade and influence in developing countries has been the source of much controversy and concern,
as its approach and policy towards developing countries has been radically different from that of international development, aid, and financial organizations. Many critics fear that China’s willingness to trade and invest in any country regardless of its economic or political regime and the... (More)
During the past two decades several studies pointed out the contradiction between abundance of natural resources and its negative impact on economic growth and development. This paradox has been widely observed and documented throughout the development literature. In this context, China’s increasing demand for natural resources and consequent growing trade and influence in developing countries has been the source of much controversy and concern,
as its approach and policy towards developing countries has been radically different from that of international development, aid, and financial organizations. Many critics fear that China’s willingness to trade and invest in any country regardless of its economic or political regime and the consequent increase in natural resources trade with the developing world would have a negative impact not only on the growth prospects of resource abundant countries but also on the quality of their institutions and patterns of resource governance. With a panel of 68 developing countries for the period 1990-2008, this paper examines the causal impact of China’s increasing natural resources demand on economic growth and patterns of resource
governance. Evidence suggests that overall in the short-term trade with China has a small and positive impact on growth. Nevertheless, the impact of increased natural resource exports on growth virtually disappears once fixed effects are introduced into the model, confirming Manzano & Rigobon’s (2001) findings in which estimation results proved to be sensitive to the inclusion of fixed effects. Furthermore, results showed no indirect effects of increased
natural resource trade with China on resource abundant countries’ institutions or governance. In the context of this study’s estimations, neither increased natural resource exports to China or to the world showed a significant negative impact on growth rates. (Less)
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author
Massi, Eliza LU
supervisor
organization
course
NEKM01 20101
year
type
H1 - Master's Degree (One Year)
subject
keywords
China, development, developing countries, natural resources, resource curse.
language
English
id
1627024
date added to LUP
2010-07-05 14:01:51
date last changed
2010-07-05 14:01:51
@misc{1627024,
  abstract     = {During the past two decades several studies pointed out the contradiction between abundance of natural resources and its negative impact on economic growth and development. This paradox has been widely observed and documented throughout the development literature. In this context, China’s increasing demand for natural resources and consequent growing trade and influence in developing countries has been the source of much controversy and concern,
as its approach and policy towards developing countries has been radically different from that of international development, aid, and financial organizations. Many critics fear that China’s willingness to trade and invest in any country regardless of its economic or political regime and the consequent increase in natural resources trade with the developing world would have a negative impact not only on the growth prospects of resource abundant countries but also on the quality of their institutions and patterns of resource governance. With a panel of 68 developing countries for the period 1990-2008, this paper examines the causal impact of China’s increasing natural resources demand on economic growth and patterns of resource
governance. Evidence suggests that overall in the short-term trade with China has a small and positive impact on growth. Nevertheless, the impact of increased natural resource exports on growth virtually disappears once fixed effects are introduced into the model, confirming Manzano & Rigobon’s (2001) findings in which estimation results proved to be sensitive to the inclusion of fixed effects. Furthermore, results showed no indirect effects of increased
natural resource trade with China on resource abundant countries’ institutions or governance. In the context of this study’s estimations, neither increased natural resource exports to China or to the world showed a significant negative impact on growth rates.},
  author       = {Massi, Eliza},
  keyword      = {China,development,developing countries,natural resources,resource curse.},
  language     = {eng},
  note         = {Student Paper},
  title        = {The resource curse and China's worldwide demand for natural resources},
  year         = {2010},
}