Resource Abundance and Resource Dependence in China

Abstract

This paper reconsiders the ‘curse of resources’ hypothesis for the case of China, and distinguishes between resource abundance, resource rents, and resource dependence. Resource abundance and resource rents are shown to be approximately equivalent, and their association with resource dependence varies with institutional quality. Resource abundance/rents has a positive impact on economic growth, while resource dependence has a negative impact. The impact of the ‘West China Development Drive’ policy, started in 2000, is substantial, and this is investigated through a comparative analysis based on cross-section samples, and through a panel-data time-varying coefficient approach for West and East provinces. Resource effects do change after the policy shock.

Keywords: Natural resource curse, Economic growth, China, Institutional quality, Resource abundance, Resource dependence, Regional differences, Policy change

JEL Classification: O11, O13, O53, C21, Q0, Q33