Natural resources and institutions: the “natural resources curse” revisited

Pessoa, Argentino (2008): Natural resources and institutions: the “natural resources curse” revisited.

Abstract

The present paper deals with the role of political authorities and institutions in explaining growth failures. We aim to search answers for three related questions: is there a natural resources curse? Are all types of natural resources exposed to a curse? Can good institutions, measured by a single indicator, avoid this “curse”? Although the estimates presented are supportive of negative relation between growth and relative resources abundance, and of the idea that good institutions enhance growth, our investigation do not demonstrated that if the curse exists it only appears in countries with inferior institutions. So, the key conclusion is that there is no justification for the pessimistic conviction that certain countries will remain caught up in a low growth trap constrained with institutions that impede their growth. At the international level, the main policy implication is that, the support to countries with a high share of natural resources in its exports should be directed towards improving specific areas of control fault, such as public budget and improving organizational systems, rather than imposing on aid-recipient countries wide-ranging global governance measures, that are usually measured by a cross-section general used, but subjective, index.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic growth; institutions; natural resources curse; resource dependence; rent seeking
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q32 - Exhaustible Resources and Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q33 - Resource Booms

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