Examining the ‘blessing’ effects of natural resource endowments on economic growth in Latin America and the Caribbean

Abstract The implications of the natural resources “curse” hypothesis are enormous for the design of economic policies, and an erroneous appreciation of this phenomenon can lead to poor decision-making with disastrous impacts on the regional economy. This study presents new evidence regarding this hypothesis for the Latin American and Caribbean (LAC) region measuring the impact on the region’s economic growth. The long- and short-run elasticities are estimated, and both the abundance and dependence effects are measured through different variables. The evidence indicates that this hypothesis is not validated for the region and that the main drivers of growth continue to be traditional factors, such as the accumulation of human and physical capital. To a lesser extent, both renewable and non-renewable natural resources also positively impact economic growth. Our study confirms a ‘blessing’ effect from these resources.