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October 2003
Prepared for the Conference on Sector Reform in Latin America Stanford Center for International Development November 13-15, 2003
Recent studies assert that natural resource abundance (particularly minerals) has adverse consequences for economic growth. This paper subjects this �resource curse� hypothesis to critical scrutiny. Our central point is that it is inappropriate to equate development of mineral resources with terms such as �windfalls� and �booms.� Contrary to the view of mineral production as mere depletion of a fixed natural �endowment,� we show that so-called �nonrenewable� resources have been progressively extended through exploration, technological progress, and advances in appropriate (often country-specific) knowledge. Indeed, minerals constitute a high-tech knowledge industry in many countries. Investment in such knowledge should be seen as a legitimate component of a forward-looking economic development program.