RICHARD M. AUTY
The four countries selected so far to analyse the basic permutations of natural resource-abundance and political state are all relatively small. This chapter turns to the large resource-abundant countries. All else being equal, a large resource-rich country should be more able than a small resource-rich country to escape a growth collapse. Chapter 2 provided two basic reasons for this. First, large economies have more scope for economic diversification because their greater geographical extent provides a wider range of natural resource exports and their potentially large domestic market facilitates the capture of economies of scale so that manufacturing diversifies earlier. Second, large economies are more self-sufficient so that the domestic impact of an external shock is automatically reduced. In addition, Table 8.3 suggests that the natural resource rents of large resource-rich countries may be not much greater, relative to GDP, than those of the resource-poor countries.
Yet, econometric analysis by Perkins and Syrquin (1989) covering the period 1950-83 shows that large countries did not perform markedly better than small ones. Perkins and Syrquin (1989) do report, however, that large countries exhibit relatively high levels of autarky (self-sufficiency), especially the resource-abundant ones. This characteristic is at the heart of the reason why the larger resource-abundant countries squandered their potential size advantage. This chapter explains why the large resource-abundant countries failed to avoid a growth collapse with reference to case studies of two of the largest resource-abundant countries, Argentina and Mexico (Table 13.1).
Natural resources played a significant role in propelling both Argentina and Mexico to mid-income status by the 1970s. In fact, Argentina had already harnessed the resources of the Pampas to become one of the richer countries in the world during the first golden age of economic growth (see Chapter 6). A century later, Argentina remains amply endowed with fertile land relative to its population (Table 13.1) and
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Publication information: Book title: Resource Abundance and Economic Development. Contributors: R. M. Auty - Editor. Publisher: Oxford University Press. Place of publication: Oxford. Publication year: 2001. Page number: 208.
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