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Resource curse: new evidence on the role of institutions

Tamat Sarmidi, Siong Hook Law and Yaghoob Jafari

MPRA Paper from University Library of Munich, Germany

Abstract: This paper attempts to provide a probable answer to a longstanding resource curse puzzle; i.e., why resource-rich nations grow at a slower rate compared to less fortunate ones. Using an innovative threshold estimation technique, the empirical results reveal that there is a threshold effect in the natural resources – economic growth relationship. We find that the impact of natural resources is meaningful to economic growth only after a certain threshold point of institutional quality has been attained. The results also shed light on the fact that the nations that have low institutional quality depend heavily on natural resources while countries with high quality institutions are relatively less dependent on natural resources to generate growth.

Keywords: Economic development; Natural resource curse; Institutions (search for similar items in EconPapers)
JEL-codes: O11 O13 Q32 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-cis, nep-cwa, nep-env and nep-pke
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Journal Article: Resource Curse: New Evidence on the Role of Institutions (2014) Downloads
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