How to Sustain Growth in a Resource Based Economy? The Main Concepts and Their Application to the Russian Case

33 Pages Posted: 30 Aug 2007

See all articles by Rudiger Ahrend

Rudiger Ahrend

Centre for Entrepreneurship, SMEs, Regions and Cities

Date Written: February 2006

Abstract

In recent years economists have come to see rich natural resource endowments as a "curse" or "precious bane" that inevitably undermines development and slows economic growth. Resource-based development undeniably involves important risks. Nonetheless, the resource curse - if it exists - is at least no fatalité, as the examples of Australia, Canada and the Scandinavian countries demonstrate. This paper argues that the serious challenges posed by resource-dependence, which include an increased vulnerability to external shocks, the risk of 'Dutch disease', and the risk of developing specific institutional pathologies, can be overcome, or at least very substantially mitigated, if accompanied by the right economic policies. It then analyses in detail what these "right" economic policies are, and how to set up economic and political framework conditions to facilitate their successful implementation. The paper thereafter looks specifically at Russia as a prominent example of a resource-based economy. It investigates briefly the main drivers of Russian growth in recent years, and makes specific recommendations that would help the Russian economy to sustain high growth.

Keywords: Russia, transition, economic growth, natural resources, Dutch disease, resource curse, oil, diversification, fiscal policy, monetary policy, capital flight

JEL Classification: E6, O1, O52, P2, Q43

Suggested Citation

Ahrend, Rudiger, How to Sustain Growth in a Resource Based Economy? The Main Concepts and Their Application to the Russian Case (February 2006). OECD Economics Working Paper No. 478, Available at SSRN: https://ssrn.com/abstract=1010671 or http://dx.doi.org/10.2139/ssrn.1010671

Rudiger Ahrend (Contact Author)

Centre for Entrepreneurship, SMEs, Regions and Cities ( email )

2 rue Andre Pascal
Paris, 75016
France
75016 (Fax)

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