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Addressing the Natural Resource Curse

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Author Info

  • Arvind Subramanian
  • Xavier Sala-i-Martin

Abstract

Some natural resources-oil and minerals in particular-exert a negative and nonlinear impact on growth via their deleterious impact on institutional quality. We show this result to be very robust. The Nigerian experience provides telling confirmation of this aspect of natural resources. Waste and poor institutional quality stemming from oil appear to have been primarily responsible for Nigeria''s poor long-run economic performance. We propose a solution for addressing this resource curse which involves directly distributing the oil revenues to the public. Even with all the difficulties that will no doubt plague its actual implementation, our proposal will, at the least, be vastly superior to the status quo. At best, however, it could fundamentally improve the quality of public institutions and, as a result, durably raise long-run growth performance.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/139.

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Length: 47
Date of creation: 01 Jul 2003
Date of revision:
Handle: RePEc:imf:imfwpa:03/139

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Related research

Keywords: Natural resources; Oil; Oil revenues; Economic growth; natural resource; oil prices; natural gas; oil companies; environmental degradation; oil producing; lead; natural resource curse; oil producing countries; gas exports; natural gas exports; natural resource abundance; oil-producing countries; ecological economics; oil discovery; natural resource economics; oil reserves; oil shocks; natural resource wealth; oil shock; oil exporter; oil production; natural resource endowments; oil discoveries; natural resource revenue; nonrenewable resources; agricultural resources;

References

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  1. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
  2. Arvind Subramanian & Francesco Trebbi & Dani Rodrik, 2002. "Institutions Rule," IMF Working Papers 02/189, International Monetary Fund.
  3. Claudio Bravo-Ortega & Jose De Gregorio, . "The Relative Richness of the Poor? Natural Resources, Human Capital and Economic Growth," Working Papers Central Bank of Chile 139, Central Bank of Chile.
  4. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
  5. Jonathan Isham & Michael Woolcock & Lant Pritchett & Gwen Busby, 2003. "The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth," Middlebury College Working Paper Series 0308, Middlebury College, Department of Economics.
  6. Jan Gunning & Paul Collier, 1996. "Policy towards Commodity Shocks in Developing Countries," IMF Working Papers 96/84, International Monetary Fund.
  7. Ehtisham Ahmad & Raju Jan Singh, 2003. "Political Economy of Oil-Revenue Sharing in a Developing Country," IMF Working Papers 03/16, International Monetary Fund.
  8. Bevan, David & Collier, Paul & Gunning, Jan Willem, 1999. "The Political Economy of Poverty, Equity, and Growth: Nigeria and Indonesia," OUP Catalogue, Oxford University Press, number 9780195209860.
  9. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
  10. Carlos Leite & Jens Weidmann, 1999. "Does Mother Nature Corrupt," IMF Working Papers 99/85, International Monetary Fund.
  11. Stanley L. Engerman & Kenneth L. Sokoloff, 1994. "Factor Endowments: Institutions, and Differential Paths of Growth Among New World Economies: A View from Economic Historians of the United States," NBER Historical Working Papers 0066, National Bureau of Economic Research, Inc.
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