Published online by Cambridge University Press: 06 July 2010
The “stylized facts” reviewed in Chapter 1 suggest that the vast majority of low and middle-income economies tend to be resource dependent, in terms of a high concentration of primary products to total exports, and that these economies appear to perform poorly. In addition, development in low and middle-income countries is associated with land conversion and increased stress on freshwater resources, and a significant share of the population in developing economies is concentrated in fragile lands.
As emphasized at the end of the previous chapter, there are a number of current theories and hypotheses that attempt to explain why natural resource-abundant economies are currently failing to develop rapidly. Curiously, however, these theories have largely ignored two of the key structural features of many developing economies today, namely the tendency for these economies to display rapid rates of “frontier” land expansion, and for a significant proportion of their poorest populations to be concentrated in fragile areas.
Building on these last two stylized facts, this chapter offers another perspective on why the structural economic dependence of a small open economy on exploiting its natural resource endowment – in particular its dependence on processes of “frontier expansion” – may not lead to sustained and high rates of economic growth. Hence, this new perspective is dubbed the frontier expansion hypothesis.
As Chapter 2 indicates, historically “frontier expansion” has been a major part of economic development.