The Myth of the Resource Curse: A Case Study for Algeria

Abstract

In October 1988, Algeria went through the autumn of its own discontent and yet more than two decades later, the country is still ruled by the "old guard", namely the veterans of the war of independence. This paper examines the reasons Algeria has resisted the winds of change blowing through the region with emphasis in the role of oil and democracy. Much of the scholarship that deals with the resource curse concludes that Oil is at the root of economic troubles and social unrest. This is not the case in Algeria, rather like many countries, its institutions are what greatly affect the economic and political ills of the country. The paper highlights the importance of institutions and presents empirical evidence to support the claim that contrary to Jeffrey Sachs they matter for everything.

Keywords: Algeria, resource curse, oil curse, institutions, democracy

JEL Classification: O13, O43, O47