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Cursed by Resources or Institutions?
Author(s) -
Mehlum Halvor,
Moene Karl,
Torvik Ragnar
Publication year - 2006
Publication title -
world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/j.1467-9701.2006.00808.x
Subject(s) - natural resource , resource curse , curse , economics , resource (disambiguation) , quality (philosophy) , natural (archaeology) , natural resource economics , political science , sociology , law , computer network , philosophy , archaeology , epistemology , anthropology , computer science , history
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.