The natural resource augmented Solow model states that the larger the amount of natural resources, the more growth the country should experience. In this case, the model uses the natural resources of a country to see whether there is any impact of natural resources on the convergence hypothesis. The data set used is obtained from the World Bank Wealth Estimates, 2005. The value of subsoil assets is used as a proxy for natural resource abundance within a country. The data obtained is based on the total amount of resources available, thus, it was divided by the working population to evaluate the effects that natural resources have on the country’s growth. As the wealth estimates only provide data for one specific year, 2005 in this case, it must be used as a proxy for natural resources. 4.3 Country Classifications To out the analysis for separate groups of countries, we have constructed six dummy variables which refer specifically to a classification of the data: Low income, Middle income, High Income, Non-oil, Intermediate and OECD. The latter two variables, Non-oil and OECD, are taken as given using the paper of Mankiw et al. (1992). The paper classified three sets of countries: Non-oil, Intermediate and OECD. The classification is as follows. The classification of the country groups are based on different criteria, which are outlined below. Non-oil countries There are a number of countries for which oil production is the dominant industry. This implies that the large percentage of GDP comes from oil production and sale. Oil is an important market throughout the world. The prices of oil are very volatile and can affect not only the GDP per worker, but also numerous other economic factors, such as trade and saving and investment rates. Thus, in order to exclude the oil bias from the data, we have introduced a non-oil dummy. There are a number of different classifications of oil producing and exporting countries. In this, case, however, we used the same classification as the paper of Mankiw, et al. (1992). In their case, the oil producing country is defined as a country, for which oil production is a dominant industry in 1960. The sample of non-oil producers consists of 78 countries. Intermediate countries
The natural resource augmented Solow model states that the larger the amount of natural resources, the more growth the country should experience. In this case, the model uses the natural resources of a country to see whether there is any impact of natural resources on the convergence hypothesis. The data set used is obtained from the World Bank Wealth Estimates, 2005. The value of subsoil assets is used as a proxy for natural resource abundance within a country. The data obtained is based on the total amount of resources available, thus, it was divided by the working population to evaluate the effects that natural resources have on the country’s growth. As the wealth estimates only provide data for one specific year, 2005 in this case, it must be used as a proxy for natural resources. 4.3 Country Classifications To out the analysis for separate groups of countries, we have constructed six dummy variables which refer specifically to a classification of the data: Low income, Middle income, High Income, Non-oil, Intermediate and OECD. The latter two variables, Non-oil and OECD, are taken as given using the paper of Mankiw et al. (1992). The paper classified three sets of countries: Non-oil, Intermediate and OECD. The classification is as follows. The classification of the country groups are based on different criteria, which are outlined below. Non-oil countries There are a number of countries for which oil production is the dominant industry. This implies that the large percentage of GDP comes from oil production and sale. Oil is an important market throughout the world. The prices of oil are very volatile and can affect not only the GDP per worker, but also numerous other economic factors, such as trade and saving and investment rates. Thus, in order to exclude the oil bias from the data, we have introduced a non-oil dummy. There are a number of different classifications of oil producing and exporting countries. In this, case, however, we used the same classification as the paper of Mankiw, et al. (1992). In their case, the oil producing country is defined as a country, for which oil production is a dominant industry in 1960. The sample of non-oil producers consists of 78 countries. Intermediate countries
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