The Resource Curse Revisited and Revised: A Tale of Paradoxes and Red Herrings

CER-ETH - Center of Economic Research at ETH Zurich, Working Paper No. 06/61

38 Pages Posted: 7 Feb 2007  

Christa N. Brunnschweiler

Norwegian University of Science and Technology (NTNU) - Department of Economics; University of Oxford - OxCarre

Erwin H. Bulte

Tilburg University - Department of Economics; Wageningen University

Date Written: December 2006

Abstract

We critically evaluate the empirical basis for the so-called resource curse and find that, despite the topic's popularity in economics and political science research, this apparent paradox is a red herring. The most commonly used measure of 'resource abundance' can be more usefully interpreted as a proxy for 'resource dependence' - endogenous to underlying institutional factors. In multiple estimations that combine resource abundance and dependence, institutional and constitutional variables, we find that (i) resource abundance, constitutions and institutions determine resource dependence, (ii) resource dependence does not affect growth, and (iii) resource abundance positively affects growth and institutional quality.

Keywords: Natural resource curse, economic growth, growth regressions, political regimes, institutions, constitutions

JEL Classification: O11, O13, Q0

Suggested Citation

Brunnschweiler, Christa N. and Bulte, Erwin H., The Resource Curse Revisited and Revised: A Tale of Paradoxes and Red Herrings (December 2006). Available at SSRN: https://ssrn.com/abstract=959149 or http://dx.doi.org/10.2139/ssrn.959149

Christa N. Brunnschweiler (Contact Author)

Norwegian University of Science and Technology (NTNU) - Department of Economics ( email )

N-7491 Trondheim
Norway

University of Oxford - OxCarre ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Erwin H. Bulte

Wageningen University

Hollandseweg 1
6706 KN
Wageningen
Netherlands

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 9111 (Phone)

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