The impact of natural resources on economic growth - the case of Latin American countries

This paper examines the impact of natural resources on economic growth in Latin America, distinguishing between resource dependence and resource abundance. Using panel data from 23 countries over the period 2000-2020 and applying a fixed effects model, we analyse the relationship between natural resource rents and GDP growth. The findings show that mineral exports are the most prominent, followed by oil and gas. While total resource rents have a positive effect on GDP, the disaggregated results reveal important differences: mineral and gas rents support growth, whereas oil rents have a negative impact - even after accounting for price fluctuations. This indicates that oil price volatility contributes to economic instability. When gas prices are controlled for, the positive effect of gas rents also weakens, underlining the role of price-related volatility. Moreover, greater trade openness is associated with lower growth, reflecting the region's vulnerability to external shocks. As Latin American economies remain heavily dependent on commodity exports, they continue to face challenges in achieving long-term stability. This study offers a nuanced perspective on resource-driven growth and the economic sustainability of resource-rich nations.