Mineral resource abundance and regional growth in Spain, 1860-2000

The natural resource curse hypothesis predicts that natural resource windfalls can reduce the long run level of income per capita by crowding out manufacturing, slowing down the accumulation of human capital, damaging institutions and increasing inequality. This paper explores some of the central tenets of the natural resource curse literature by exploiting variation in mineral resources in Spain from 1860 to 1936. The conclusions of the paper are that, contrary to the natural resource curse hypothesis, natural resources had a positive, sizeable effect on industrialisation by 1920 and that they did not reduce real wage growth in the period 1860-1920. Moreover, extractive industries did not slow down the accumulation of human capital. When I look at the very long run by analysing real income per capita convergence from 1930 to 2000, there are no significant costs of early specialisation in extractive industries. Copyright © 2008 John Wiley & Sons, Ltd.