TY  - JOUR
AU  - Manzano,Osmel
AU  - Rigobon,Roberto
TI  - Resource Curse or Debt Overhang?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8390
PY  - 2001
Y2  - July 2001
UR  - http://www.nber.org/papers/w8390
L1  - http://www.nber.org/papers/w8390.pdf
N1  - Author contact info:
Osmel Manzano
Kennedy School of Government
Harvard University
79 JFK Boulevard
Cambridge, MA 02138
Tel: 617-496-7450
Fax: 617-495-1635
E-Mail: Osmel_Manzano@ksg.harvard.edu

Roberto Rigobon
MIT Sloan School of Management
100 Main Street, E62-516
Cambridge, MA 02142
Tel: 617/258-8374
Fax: 617/258-6855
E-Mail: rigobon@mit.edu
AB  - It has been widely believed that resource abundant economies grow less than other economies. In a very influential paper, Sachs and Warner (1997), point out that there is a negative relationship between resource abundance and growth. Two important econometric problems are present in the traditional empirical literature: First, the result might depend on factors that are correlated with primary exports but that have been excluded from the regression. Second, total GDP includes the production in the resource sector that has been declining in the last 30 years. We correct for those issues. Our results indicate that the so called 'Natural Resource Curse' might be related to a debt overhang. In the 70's when commodities' prices were high, natural resource abundant countries used them as collateral for debt. The 80's witnessed an important fall in the prices that drove these countries to debt crises. When we estimate the model taking these into account, we found that the effect of resource abundance disappears.
ER  -