Natural Resources and Export Concentration: On the Most Likely Casualties of Dutch Disease

The literature on Dutch disease is extensive when it comes to documenting the negative impacts of natural resource exports on non-resource tradable goods as an aggregate. Little has been said on the impact of natural resources on non-resource export concentration, either from a broad perspective or at the product level. We explore this relationship using a variety of non-resource export concentration indexes for the period 1985-2010. We find significant evidence indicating that countries with high share of natural resources in exports tend to have less diversified non-resource export baskets. Furthermore, using highly disaggregated data at the product level we study what type of products are more likely to thrive or suffer in resource rich countries. We find that capital intensive goods tend to have larger shares on the non-resource export basket when natural resources are high. We also find that homogeneous goods make for a larger share of the non-resource export basket the lower their technological sophistication. For differentiated goods the pattern is reversed: they tend to make for a larger share of the non-resource export basket, the higher they are in the technology scale.