Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 2012:17: The Resource Curse and its Potential Reversal

Anne Boschini (), Jan Pettersson () and Jesper Roine ()
Additional contact information
Anne Boschini: Department of Economics, Stockholm University.
Jan Pettersson: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Jesper Roine: SITE, Stockholm School of Economics, and IZA

Abstract: Several recent papers suggest that the negative association between natural resource intensity and economic growth can be reversed if institutional quality is high enough. We try to understand this result in more detail by decomposing the resource measure, using alternative measures of both resources and institutions, and by studying different time periods. While an institutional reversal is present in many specifications, only ores and metals interacted with the ICRG measure of institutional quality consistently have a negative growth effect but a positive interaction that turns the curse around when institutions are good enough.

Keywords: Natural Resources; Minerals; Fuels; Resource Curse; Property Rights; Institutions; Economic Growth; Development

JEL-codes: N50; O13; O40; O57; P16

46 pages, November 4, 2012

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