Revisiting the Natural Resource Curse: Backward Linkages for Export Diversification and Structural Economic Transformation

Abstract

This article revisits and empirically tests the conjecture that specialization in natural resource industries (NRI) might not necessarily be a ‘curse’ for developing countries if it generates opportunities for export diversification in backward-linked sectors à la Hirschman. The article systematizes the evolution of the debate around the NRI ‘curse’. Then it empirically tests whether NRI might represent a sufficient ‘domestic representative demand’ à la Linder to favour diversification into backward-linked sectors such as knowledge-intensive business services and high-tech manufacturing. It focuses on the former and discusses the new opportunities for export diversification led by virtuous pathways of domestic structural change. It finds novel, quantitative empirical support for this conjecture, which complements extant qualitative literature and discusses implications that revisit the NRI curse debate.