Mother Earth: Ally or Adversary?
Published: March 2002
Economic growth requires capital. This article reviews the relationship between
economic growth around the world and six different kinds of capital: real capital; human capital; financial capital; foreign capital; social capital; and natural capital. Economic theory and empirical evidence suggest that domestic and foreign
investment, education, financial maturity, and reasonable equality in the
distribution of income are all good for growth. However, recent theory and
evidence also seem to suggest that natural capital—i.e., abundant natural
resources—may crowd out or impair other types of capital and thus impede
economic growth over long periods.