An Introduction to Economic Growth Theory and the Oil Market

Abstract

The reliance of production and economic growth on natural resources, specifically oil, may result in a decline on economic growth due to resource constraints.

Malthus (1803) was one of the first who attempted to answer the question whether natural resources hinder or even limit economic growth. He concluded that an exponential increase in population cannot be sustained with a modest linear increase of food production. The finite agricultural production possibilities due to limited land availability would result in the starvation of the excess population. The scarce natural resource, land, leads to long-term economic stagnation. Shortly after Malthus described his theory the industrial revolution began. The industrialization helped western European countries to escape the Malthusian trap.