Institutions and the Resource Curse

Halvor Mehlum, Karl Ove Moene and Ragnar Torvik

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: Countries rich in natural resources constitute both growth losers and growth winners. We claim that the main reason for these diverging experiences is differences in the quality of institutions. More natural resources push aggregate income down, when institutions are grabber friendly, while more resources raise income, when institutions are producer friendly. We test this theory building on Sachs and Warner's influential works on the resource curse. Our main hypothesis: that institutions are decisive for the resource curse, is confirmed. Our results are in sharp contrast to the claim by Sachs and Warner that institutions do not play a role.

Keywords: Natural resources; Institutional quality; Growth; Rent-seeking (search for similar items in EconPapers)
JEL-codes: F43 O4 Q0 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2004-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (60)

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Related works:
Chapter: Institutions and the Resource Curse (2006)
Journal Article: Institutions and the Resource Curse (2006)
Working Paper: Institutions and the resource curse (2003)
Working Paper: Institutions and the resource curse (2002)
Working Paper: Institutions and the resource curse (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c009_012

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