Natural resource dependence and the accumulation of physical and human capital in Latin America

In a simultaneous model of human and physical capital accumulation for 17 Latin American countries from 1975 to 2004, we show that overall resource dependence has no significant direct effect on physical and human capital. When disaggregating the natural resource variable into sub-categories, we find that petroleum export dependence has a significant positive direct effect on physical capital, but a significant negative direct effect on human capital. Agricultural export dependence shows a significant negative direct effect on physical capital. Petroleum exports have a long run positive effect on physical capital but a negative long run effect on human capital. Agricultural exports have a negative long run effect on physical and human capital. ► We examine natural resource dependence and capital accumulation in Latin America. ► Resource dependence is not significantly related to physical and human capital. ► Disaggregating resources yields interesting results. ► Petroleum export dependence raises physical capital and lowers human capital. ► Little evidence that resource dependence hampered capital accumulation in the region.