Economics, Econometrics and Finance
4 years ago

'Factor mobility costs mitigate Dutch Disease symptoms within federations, study finds.'

MPRA Paper
Dutch Disease, Factor Mobility Costs, and the ‘Alberta Effect’ – The Case of Federations
Ohad Raveh

Paper Summary

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Reduced costs of moving resources within countries can help lessen the negative effects of having a lot of natural resources, known as the 'Resource Curse'. In countries that are made up of smaller regions, having lots of resources is actually a good thing. However, if the country has poor institutions, the negative effects can be worse within the regions. This is because it's easier for resources to move around within the country, which helps balance out the negative effects. This shows that the movement of resources is important in preventing the 'Resource Curse'. The United States and Canada are examples of this in action.