Scarcity and Growth Revisited

Abstract

The analysis presented in this paper is concerned with the effect of resource scarcity on economic growth. After the notion of scarcity is defined and two measures of scarcity are introduced—unit cost and relative resource price—changes in the trend in resource scarcity for lead, zinc, nickel, aluminium, silver, iron, and copper in the 1960s, 1970s, and 1980s are investigated. Only for silver and iron is there any indication that such a change has occurred. For silver, the change is transitory. It is believed that changes in resource scarcity have implications for future economic growth depending on the extent of the change and the degree to which resource scarcity and economic growth are interrelated. To see whether this is a relevant concern cointegration techniques are utilized to identify objectively a long-run equilibrium relationship between resource scarcity and economic growth. Only for the unit cost measure for lead and copper for one of the measures of cointegration is there a suggestion that resource scarcity has affected economic growth in the United States over the period 1889–1992.