SSE/EFI Working Paper Series in Economics and Finance
Resource curse or not: A question of appropriability
(), Jan Pettersson
() and Jesper Roine
Abstract: This paper shows that whether natural resources are good
or bad for a country's development depends crucially on the interaction
between institutional setting and the type of resources that the country
possesses. Some natural resources are for economical and technical reasons
more likely to cause problems such as rent-seeking and conflicts than
others (termed technically appropriable resources). This potential problem
can, however, be countered by good institutional quality (rendering these
resources less institutionally appropriable). In contrast to the
traditional resource curse hypothesis we show that the impact of natural
resources on economic growth is non-monotonic in institutional quality.
Mineral rich countries are cursed only if they have low quality
institutions, while the curse is reversed if institutions are good enough.
Using new data we find that this is even more stark for countries rich in
diamonds and precious metals.
Keywords: natural resources; appropriability; property rights; institutions; economic growth; development; (follow links to similar papers)
JEL-Codes: N50; O13; O40; O57; P16; (follow links to similar papers)
37 pages, September 18, 2003
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