Humboldt and the economists on natural resources, institutions and underdevelopment (1752 to 1859)

The article discusses how early economists, sometimes informed by the pioneer report on a Latin American country (Mexico) by the geographer A. von Humboldt, interpreted the connections between natural resources, institutions and growth. The paradox of a negative relation between natural wealth and growth was elaborated, before Humboldt,by Hume. Humboldt's account of the high degree of income inequality in Mexico caught Malthus's attention, who turned it into a key element of his anti-Ricardo view that the fertility of soil may be associated with poor growth if there is a lack of effective demand. Cairnes claimed that the structural impact of a natural resource boom on the rest of the economy is compatible with the comparative-advantage framework. J.S. Mill articulated the potential perverse effects of natural wealth on effort supply and weak institutions, a theme conspicuous in the modem literature about the natural resource curse.