Reto Bertoni (Universidad de la República, Uruguay)
Henry Willebald (Universidad de la República, Uruguay)
Settler economies are characterized by having an abundance of natural resources. However, natural capital is not homogeneous among countries, and this can have consequences in terms of economic performance. As a part of the debate about the natural resource curse (and blessing) hypothesis, this paper discusses the effect of natural resources on economic performance. It focuses the analysis on energy resources, considering their effect on two settler societies: NZ and UY.. Literature about the economic development of settler economies that identifies differences within the “club” in regards to disparities in natural resources is very scarce. We propose to look for differences in energy natural endowments (primarily coal endowments and suitable conditions for hydroelectric generation) to explain (at least partially) the differences in welfare levels between both economies. Despite many similarities –in terms of productive structure, movements in productive factors and insertion in international markets– New Zealand and Uruguay showed huge differences in income per capita levels during 19th century and the first decades of 20th century. Therefore, other spheres of the economic system must be studied in order to find new answers to why these differences exist. The analytical framework associated with the natural resource curse offers some interesting lines of argument relevant to this discussion. Differences in the production of coal and natural conditions for generating electrical energy at low costs, which tend to favour of New Zealand, explain those disparities. We introduce new evidence that supports the natural resource curse hypothesis.
