|**Table 3. Trade, diver**<br>_Dependent variable normal_<br>_Estimation Method: GMM-_|**sification, an**<br>_ized by per wor_<br>_IV System Estim_<br>1|**d growth: Tr**<br>_ker (5-year non-_<br>_ator (Arellano a_<br>2|**ansmission**<br>_overlapping av_<br>_nd Bover, 1995_<br>3|**channels**<br>_erages)_<br>_; Blundell and B_<br>4|_ond,1998)_<br>5|6|
|---|---|---|---|---|---|---|
||[]<br>Output per|[]<br>Capital per|[]<br>TFP|[]<br>Output per|[]<br>Capital per|[]<br>TFP|
||worker|worker||worker|worker||
|Initial GDP per worker|-0.027<sup>***</sup>|-0.019<sup>***</sup>|-0.016<sup>***</sup>|-0.020<sup>***</sup>|-0.009<sup>***</sup>|-0.011<sup>***</sup>|
|_(in logs)_|(0.000)|(0.000)|(0.000)|(0.000)|(0.000)|(0.000)|
|Exports and Imports|0.032<sup>***</sup>|0.024<sup>***</sup>|0.022<sup>***</sup>|0.017<sup>***</sup>|0.011<sup>***</sup>|0.014<sup>***</sup>|
|_(% of GDP, logs)_|(0.000)|(0.000)|(0.000)|(0.000)|(0.000)|(0.000)|
|Market Concentration|0.020<sup>***</sup>|-0.002|0.021<sup>***</sup>|0.006<sup>***</sup>|0.007<sup>***</sup>|0.003<sup>**</sup>|
|_(Herfindahl Index)_|(0.000)|(0.499)|(0.000)|(0.000)|(0.000)|(0.002)|
|Product Concentration|-0.038<sup>***</sup>|-0.024<sup>***</sup>|-0.027<sup>***</sup>|-0.020<sup>***</sup>|-0.018<sup>***</sup>|-0.011<sup>***</sup>|
|_(Herfindahl Index)_|(0.000)|(0.000)|(0.000)|(0.000)|(0.000)|(0.000)|
|Natural Resource exports|0.007<sup>**</sup>|0.008<sup>***</sup>|0.006<sup>***</sup>|-0.005<sup>***</sup>|-0.002<sup>***</sup>|-0.003<sup>***</sup>|
|_(% of GDP)_|(0.002)|(0.000)|(0.000)|(0.000)|(0.000)|(0.001)|
|Secondary enrollment rate||||0.008<sup>***</sup>|-0.001|0.002<sup>***</sup>|
|_(initial level, logs)_||||(0.000)|(0.800)|(0.000)|
|ICRG Political Risk Index||||0.006<sup>***</sup>|0.001<sup>***</sup>|0.005<sup>***</sup>|
|_(principal components)_||||(0.000)|(0.000)|(0.000)|
|Credit to private sector||||-0.013<sup>***</sup>|-0.006<sup>***</sup>|-0.009<sup>***</sup>|
|_(% of GDP)_||||(0.000)|(0.000)|(0.000)|
|Government consumption||||-0.002|0.007<sup>***</sup>|-0.012<sup>***</sup>|
|<br>_(% of GDP)_||||(0.862)|(0.000)|(0.000)|
|Growth volatility||||0.222<sup>***</sup>|-0.059<sup>***</sup>|0.033<sup>**</sup>|
|_(S.D. growth per worker)_||||(0.000)|(0.000)|(0.003)|
|Constant|0.083<sup>***</sup>|0.034|0.042<sup>**</sup>|0.130<sup>***</sup>|0.044<sup>***</sup>|0.089<sup>***</sup>|
||(0.000)|(0.091)|(0.002)|(0.000)|(0.000)|(0.000)|
|Observations|840|840|811|601|601|601|
|_AR(1)_|0.000|0.003|0.000|0.001|0.209|0.000|
|<br>_AR(2)_|0.238|0.015|0.704|0.527|0.003|0.912|
|<br>_Hansen_<br>_p_-values in parentheses<br>* _p_< 0.05,** _p_< 0.01,*** _p_|0.198<br>< 0.001|0.035|0.183|0.386|0.338|0.317|

Finally, natural resource exports (as percentage of GDP) hamper growth when controlling for other sources of growth, and its adverse impact on economic growth is transmitted through lower capital accumulation per worker and slower TFP growth. The coefficient estimate of natural resource export dependence is larger (in absolute value) for the TFP growth regression than for the capital accumulation regression although the differences are small: -0.002 for the growth of capital stock per worker equation (column [5] of Table 3) and -0.003 for the TFP growth regression equation (column [6] of Table 3). These estimates suggest that cutting in half the extent of natural resource export dependence would increase the growth rate of capital stock per worker by 0.1 percentage point per year and would accelerate TFP growth by 0.2 percentage point per year.

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