The Shifting Natural Wealth of Nations: The Role of Market Orientation

Sep 2016 | 180

Authors: Rick Van der Ploeg Rabah Arezki, Ferderik Toscani


This paper explores the effect of market orientation on (known) natural wealth using a novel dataset of world-wide major hydrocarbon and mineral discoveries. Consistent with the predictions of a two-region model, our empirical estimates based on a large panel of countries show that increased market orientation causes a significant increase in discoveries. In a thought experiment whereby economies in Latin America and sub-Saharan Africa remained closed, they would have only achieved one quarter of the actual increase in discoveries they have experienced since the early 1990s. Our results call into question the commonly held view that resource endowment is exogenous.

JEL Codes: E00, F3, F4.

Keywords: natural resources, discoveries, market orientation, liberalization, institutions, endogenous reserves


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