Macroeconomic volatility can also affect economic performance, especially private investment. To the extent that natural resources have higher price volatilities than other goods, it is possible that this might be a channel through which they affect growth performance. Following Servén (2003), our measure of macroeconomic uncertainty is the standard deviation of the monthly variation of the log of the Real Effective Exchange Rate from the IMF’s _International Financial Statistics_ .

The empirical neoclassical growth model of MRW includes, in addition to the level of education of the population and the investment rate, the growth of “effective units of labor,” which is the observed growth of labor for each country minus a global capitaldepreciation rate plus an estimate of the global rate of technological progress. MRW assume that the rate of technological progress minus the rate of capital depreciation is equal to 0.05 per year. If the neoclassical growth model is correct, the expected coefficient on the log of the growth of the effective labor force should be around -0.5. MRW found this to be within the confidence intervals of the relevant coefficient only for growth regressions with a sample of OECD high-income countries, but not for samples with developing countries. For the sake of consistency, we include the MRW variable in the levels as wells as the growth regressions.

Lastly, in light of evidence from the Quantile Regressions (see below) suggesting that there is substantial heterogeneity in the intercepts, we also include regional dummy variables in the 3SLS cross-sectional estimations of the static and dynamic models. The regions are classified according to the World Bank’s regional groups into seven groups as described in the Appendix table.

_VI. B. Descriptive statistics of net exports of natural resources and performance_ Table 1 shows the average annual variation in the terms of trade, the average annual growth of GDP per capita, the average value of the executive constraints index, and the average growth of exports and imports of natural resources in current U.S. dollars. The data show the average of each indicator for countries that were net exporters in all five-year periods during 1980-2005, net importers in all periods, and two groups of switchers. The lower panel of the table contains the corresponding information for the sample of Latin American and Caribbean (LAC) economies with available data. It is notable that the vast majority of countries in the data were either net exporters or importers, and the number of switchers is small. In the case of LAC, the switchers were four small economies, including El Salvador (became a net exporter on average only during 1985-1989), Guatemala, Nicaragua, and Paraguay (net importer only in 1995-1999).

Interestingly, the net exporters of natural resources experienced terms of trade deteriorations on average, while net importers experienced slight improvements. In the sample period, the Prebisch-Singer hypothesis on the deterioration of the terms of trade could be present. But variations in these relative prices would need to affect either the level growth of the terms of trade, and regional dummies.

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