Cursed by Resources or Institutions?

Halvor Mehlum (), Karl Ove Moene () and Ragnar Torvik ()

The World Economy, 2006, vol. 29, issue 8, pages 1117-1131

Abstract: Natural resource-abundant countries constitute both growth losers and growth winners, and the main difference between the success cases and the cases of failure lies in the quality of institutions. With grabber-friendly institutions more natural resources push aggregate income down, while with producer-friendly institutions more natural resources increase income. Such a theory finds strong support in data. A key question we also discuss is if resources in addition alter the quality of institutions. When that is the case, countries with bad institutions suffer a double resource curse - as the deterioration of institutions strengthens the negative effect of more natural resources. Copyright 2006 The Authors Journal compilation 2006 Blackwell Publishing Ltd.

Date: 2006
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