Natural Resources: Curse or Blessing?
70 Pages Posted: 17 Jul 2010
Date Written: July 15, 2010
Abstract
Are natural resources a “curse” or a “blessing”? The empirical evidence suggests either outcome is possible. The paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. These include that a resource bonanza induces appreciation of the real exchange rate, deindustrialization and bad growth prospects, and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law, corruption, presidential democracies, and underdeveloped financial systems. Another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad, induces corruption especially in non-democratic countries, and keeps in place bad policies. Finally, resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets. The survey also offers some welfare-based fiscal rules for harnessing resource windfalls in developed and developing economies.
Keywords: resource curse, cross-country, panel and quasi-experimental evidence, Dutch disease, institutions, corruption, financial development, volatility, Hotelling rule, genuine saving, Hartwick rule, natural resource wealth management, sustainable development
JEL Classification: C12, C13, E01, F43, K42, O41, Q30
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Institutions and the Resource Curse
By Halvor Mehlum, Karl O. Moene, ...
-
Addressing the Natural Resource Curse: An Illustration from Nigeria
-
Addressing the Natural Resource Curse: An Illustration from Nigeria
-
Political Foundations of the Resource Curse
By James A. Robinson, Ragnar Torvik, ...
-
By Jonathan Isham, Michael Woolcock, ...
-
Kleptocracy and Divide-and-Rule: A Model of Personal Rule
By Daron Acemoglu, James A. Robinson, ...
-
Kleptocracy and Divide-and-Rule: A Model of Personal Rule
By Daron Acemoglu, James A. Robinson, ...
-
Kleptocracy and Divide-and-Rule: A Model of Personal Rule
By Daron Acemoglu, James A. Robinson, ...
-
Natural Resources and Economic Growth: The Role of Investment
By Thorvaldur Gylfason and Gylfi Zoega
-
Natural Resources and Economic Growth: The Role of Investment
By Thorvaldur Gylfason and Gylfi Zoega
