CEDA have a new paper out today by Keith Smith on whether resource-based economies can also innovate. He says ‘yes.’
The Age reported on the paper and quoted my response:
Melbourne Business School Professor Joshua Gans said there was some truth to the idea that being resource rich did not necessarily mean a country had to be innovation poor.
“What countries such as Australia need to do is to encourage innovation that builds off natural strengths rather than try to mimic what resource poor countries do,” he said.
Put simply, if we have a resource boom that pushes up the exchange rate making it cheap to import high technology goods. What countries such as Australia need to do is to encourage innovation that builds off natural strengths rather than tries to mimic what resource poor countries do (such as is often the case in electronics and ICT). Instead, veterinary and bio-medical innovations are a natural complement to strength in agriculture. Mineral extraction technologies and bulk transport logistics naturally fit with mining. And environmental management comes hand in hand with having tourism in some of the world’s most naturally endowed areas. In a 2003 report, Scott Stern and I documented this potential and advocated the governments around Australia see these traditional industries as potentially high-tech ones too.
Core Economics 
Hi Joshua,
The late nineteenth century US experience is an example of where a resource abundance economy also made important innovations. See Wright (1990, AER 80(4)), David and Wright (1997, Industrial and Corporate Change, 6(2)). The cement industry provides an example of how resource abundance helped innovation (see http://www.latrobe.edu.au/business/abstracts_2006.html#A06.02)
cheers
LikeLike