growth. The first one looks at the link between natural resource abundance and the quality and effectiveness of political institutions. The underlying idea is that abundance of a commodity generates rents that might favor rent‐seeking behaviors, corruption, conflicts and /or political instability which have adverse effects on long‐term growth (Duncan, 2006; Guriev _et al._ , 2008; Isham _et al._ , 2003; Lane and Turnell, 1996, 1999; Manzano and Monaldi, 2008). The second channel focuses on the fact that natural resource abundance might expose countries to price volatility (Sala‐i‐Martin and Subramanian, 2003). Commodity price volatility could lead to instability of public spending and of export income as well as under‐saving of natural resource revenues (Sinnott _et al._ , 2010). These in turn can lower economic growth by increasing the instability of aggregate output and demand in the short run. Finally, commodity dependence might affect a country’s economic performance as it increases countries’ risk of the so‐called Dutch Disease, i.e. an appreciation of the exchange rate in response to positive shocks, which brings to a contraction of the tradable sectors with potential negative effect on growth. The de‐industrialization caused by the Dutch Disease, in fact, might hamper a country’s growth perspective because it hurts mainly the manufacturing sector, which tends to be more competitive and innovative than the non‐tradable ones (Oomes and Kalcheva, 2000) or because it reduces the ability of the economy to absorb shocks via labor mobility (Hausmann and Rigobon, 2003).

Besides influencing economic growth perspectives, income distribution is also affected, via similar channels<sup>3</sup> by natural resource abundance (UNCTAD Annual Report on Trade and Development, 2012). Warr (2008), for example, uses a general equilibrium model and finds that the increase of staple food prices between 2003 and 2008 increased the incidence of poverty in Thailand, an exporter of agricultural goods. He shows that this happened because the main gainers of higher food prices were the landowners and not the poor; the expansion of the agricultural sector, in fact, increased the wage of unskilled workers but this was outbalanced by the negative effect higher staple food prices had on the poor. Essama‐Nssah _et al._ (2008) use a macro‐micro simulation approach to analyze the effect of the rising oil price on an oil importer country, South Africa, between 2003 and 2006. At the macro level, higher oil prices reduced the real GDP, caused a depreciation of the exchange rate and affected the labor market differently according to the sector considered, with fuel intensive sectors experiencing a bigger reduction in employment. The

> 3 Changes in relative prices, related to the resource effect and the spending effect (Corden and Neary, 1984) of the Dutch disease are the main channels through which distribution is affected and the focus of much of this paper. For an oil exporter country the two effects can be described as follows. Higher oil prices will lead to higher returns to labor and capital in the oil sector and this will cause a movement of the productive factors from the less remunerative manufacturing industries to the expanding oil activities. The higher wages and/or profits generated in the latter lead to a higher aggregate demand that will cause an increase in the prices of non‐tradables while the price of tradables, being determined above, remains unchanged. The combination of the two effects causes a de‐industrialization and an appreciation of the exchange rate.

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