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Sustainability 2018, 10(3), 715; https://doi.org/10.3390/su10030715

Natural Capital, Domestic Product and Proximate Causes of Economic Growth: Uruguay in the Long Run, 1870–2014

1
PHES, Programa de Posgrado, Facultad de Ciencias Sociales, Universidad de la República, 11200 Montevideo, Uruguay
2
Facultad de Ciencias Económicas y de Administración, Universidad de la República, 11200 Montevideo, Uruguay
*
Author to whom correspondence should be addressed.
Received: 30 November 2017 / Revised: 6 February 2018 / Accepted: 27 February 2018 / Published: 6 March 2018
(This article belongs to the Special Issue Natural Resources Economics)
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Abstract

The debate on the relationship between natural resources abundance and economic growth is still open. Our contribution to this field combines a long-run perspective (1870–2014) with the study of a peripheral country in the world economy (Uruguay). The purpose is to build a historical series of natural capital and contrast its level and evolution with the level and growth of GDP, as well as the proximate causes of its economic growth (produced and human capital, exports and terms of trade). We show that natural capital has tended to decline in importance in the economy, while simultaneously becoming more diversified. Although this evolution is consistent in historical terms, we do not find a causal relationship between the abundance of natural resources and economic performance. Instead of a direct relationship, the proximate causes appear to have been important in explaining the evolution of natural capital when we consider three stages of economic growth: physical capital and terms of trade during the agro-exporter model; human capital and exports during the period of import substitution industrialization; and terms of trade from the 1970s afterwards. These factors cause natural capital but not the other way around, leading us to conclude that an abundance of natural capital is an endogenous process. View Full-Text
Keywords: natural capital; economic growth; Uruguay natural capital; economic growth; Uruguay
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Sandonato, S.; Willebald, H. Natural Capital, Domestic Product and Proximate Causes of Economic Growth: Uruguay in the Long Run, 1870–2014. Sustainability 2018, 10, 715.

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