BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
Does democracy cure a resource curse?
Abstract: In this paper we utilise a large and reasonably detailed
dataset to show that a greater level of democracy in a country's political
institutions can alleviate the widely known resource curse. Raw material
abundance affects per capita growth negatively, an effect that seems to
work through several different channels. Resource-abundant countries have a
lower degree of democracy and political rights, and also a lower level of
educational attainment. These factors inhibit growth. On the other hand,
countries with large extractive industries exhibit high levels of
investment. The effects of resource abundance differ for different raw
material types, and the largest negative effect on growth appears to come
from non-fuel extractive raw materials.
Keywords: economic growth; resource curse; cross-country regression; development; governance; institutions; (follow links to similar papers)
38 pages, November 1, 2004
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