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Addressing the Natural Resource Curse: An Illustration from Nigeria

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  • Xavier Sala-i-Martin
  • Arvind Subramanian

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 corruption from oil rather than Dutch disease has been responsible for its 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 of corruption and inefficiency 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, transform economics and politics in Nigeria.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9804.

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Date of creation: Jun 2003
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Publication status: published as Xavier Sala-i-Martin & Arvind Subramanian, 2013. "Addressing the Natural Resource Curse: An Illustration from Nigeria," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 22(4), pages 570-615, August.
Handle: RePEc:nbr:nberwo:9804

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  1. Gernot Doppelhofer & Ronald I. Miller & Xavier Sala-i-Martin, 2000. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (Bace) Approach," OECD Economics Department Working Papers 266, OECD Publishing.
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  7. Bevan, David & Collier, Paul & Gunning, Jan Willem, 1999. "The Political Economy of Poverty, Equity, and Growth: Nigeria and Indonesia," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780195209860, October.
  8. Pinto, Brian, 1987. "Nigeria during and after the Oil Boom: A Policy Comparison with Indonesia," World Bank Economic Review, World Bank Group, World Bank Group, vol. 1(3), pages 419-45, May.
  9. Daron Acemoglu & Simon Johnson & James A. Robinson, 2000. "The Colonial Origins of Comparative Development: An Empirical Investigation," NBER Working Papers 7771, National Bureau of Economic Research, Inc.
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  11. Lant Pritchett & Michael Woolcock & Gwen Busby & Jonathan Isham, 2004. "The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth," Middlebury College Working Paper Series, Middlebury College, Department of Economics 0308r, Middlebury College, Department of Economics.
  12. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 681-712, August.
  13. Ricardo Hausmann & Roberto Rigobon, 2003. "An Alternative Interpretation of the 'Resource Curse': Theory and Policy Implications," NBER Working Papers 9424, National Bureau of Economic Research, Inc.
  14. 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, National Bureau of Economic Research, Inc 0066, National Bureau of Economic Research, Inc.
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  16. Arvind Subramanian & Francesco Trebbi & Dani Rodrik, 2002. "Institutions Rule," IMF Working Papers 02/189, International Monetary Fund.
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