Resource Abundance and Economic Development

By R. M. Auty | Go to book overview

18 A Nordic Perspective on Natural Resource Abundance

THORVALDUR GYLFASON


18.1 THE NORDIC COUNTRIES SINCE 1970

This chapter analyses the Nordic countries as relatively late industrializers and asks what evidence there is that resource abundance continues to affect their economic performance. Since about 1970, the Nordic economies generally have grown less rapidly than those of many other industrial countries have. Their living standards have also diverged from one another: they were approximately the same around 1990, but that is no longer the case. In 1997 for example, Norway's ppp-adjusted per capita GNP, the highest in the group, was 28 per cent higher than that of Sweden, the lowest, compared with a difference of less than 1 per cent in Sweden's favour, in 1990 (World Bank 1999). If we gauge living standards by ppp-adjusted GDP per hour worked, a better measure because it mirrors labour productivity, then we find a 25 per cent difference between Norway and Sweden, a 35 per cent difference between Norway and Finland, and a difference of about 50 per cent between Norway and Iceland (Table 18.1).

It is not enough, however, to look at current income flows and the hours of work necessary to sustain them in order to assess the wealth of nations and their living standards. It is also necessary to view the underlying trends, including the status and movement of key macroeconomic stock variables like natural-resource endowments, including the environment, and other national assets and liabilities. However, many of these assets and liabilities—natural-resource endowments and social capital among them—are notoriously hard to measure. Table 18.2 shows the World Bank's estimates of the level and composition of total ppp-adjusted national wealth per person in 1994 in the Nordic countries (all but Iceland). According to these estimates, the national wealth of each of the Nordic countries is above the West-European average, but below that for North America. Human capital is by far the most important component of wealth everywhere. The share of natural capital is accordingly small everywhere, ranging from 4 per cent in Denmark to 10 per cent in Norway. Natural resources

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Resource Abundance and Economic Development
Table of contents

Table of contents

  • Unu World Institute for Development Economics Research (Unu/Wider) ii
  • Resource Abundance and Economic Development iii
  • Foreword v
  • Acknowledgements vii
  • Contents ix
  • List of Tables xi
  • List of Figures xiv
  • List of Contributors xv
  • Part I Introduction 2
  • 1: Introduction and Overview 3
  • References 15
  • Part II Critical Parameters in Resource-Based Development Models 18
  • 3: The Sustainability of Extractive Economies 36
  • Appendix 3.1 Deriving Net Income and Genuine Saving 46
  • References 55
  • References 73
  • Part III Long-Term Perspective On, and Models Of, Resource-Based Growth 94
  • References 109
  • 7: Short-Run Models of Contrasting Natural Resource Endowments 113
  • References 124
  • References 142
  • Part IV Development Trajectories of Resource-Abundant Countries 145
  • 9: Competitive Industrialization with Natural Resource Abundance 147
  • References 163
  • 10: A Growth Collapse with Diffuse Resources 165
  • References 177
  • References 191
  • 12: A Growth Collapse with High Rent Point Resources 193
  • References 206
  • 13: Large Resource-Abundant Countries Squander Their Size Advantage 208
  • References 220
  • Part V Lessons for Policy Reform 223
  • References 237
  • 15: Growth, Capital Accumulation, and Economic Reform in South Africa 239
  • Appendix 15.1 257
  • References 258
  • 16: Reforming Resource-Abundant Transition Economies 260
  • References 275
  • References 294
  • 18: A Nordic Perspective on Natural Resource Abundance 296
  • Part VI Conclusions 314
  • 19: Conclusions 315
  • References 327
  • Index 329
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