THE NET NATIONAL PRODUCT AND EXHAUSTIBLE RESOURCES - THE EFFECTS OF FOREIGN-TRADE

It is the widely held view that estimates of national income should be corrected for the value of the extracted exhaustible resource stock. This correction implies the counter-intuitive result that the national income of an oil producer is unaffected by its vast oil reserves. In this paper we review the definition of national income, and discuss it s relation to national welfare. We show that an extra income should be imputed to the resource-owning country based on the exportable resour ce stock. Part of the net adjustment for resource use is made to the i ncome of the resource-using and not the resource-producing country.