Long-Run Effects of Resource Rents in Developing Countries

OxCarre WP by Woldeyes: The paper studies the long-run effects of shocks to resource rents on the economy using a structural vector error correction model for 37 developing countries. First, the long-run relations involving resource rents and the economy differ for resource importers and exporters. Second, there is an indirect effect from resource rents to output through public capital accumulation for resource exporters. Third, although resource rents have a positive long-run impact on output, good public investment management is required for resource rents to improve non-resource output.