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Institutions and the resource curse

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Author Info

  • Halvor Mehlum

    (University of Oslo)

  • Karl Moene

    (University of Oslo)

  • Ragnar Torvik

    (NTNU, Trondheim)

Abstract

Countries rich in natural resources constitute both growth losers and growth winners. We claim that the main reason for these diverging experiences is differences in the quality of institutions. More natural resources push aggregate income down, when institutions are grabber friendly, while more resources raise income, when institutions are producer friendly. We test this theory building on Sachs and Warner's influential works on the resource curse. Our main hypothesis: that institutions are decisive for the resource curse, is confirmed. Our results are in sharp contrast to the claim by Sachs and Warner that institutions do not play a role.

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File URL: http://128.118.178.162/eps/dev/papers/0210/0210003.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0210003.

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Length: 26 pages
Date of creation: 08 Oct 2002
Date of revision:
Handle: RePEc:wpa:wuwpdc:0210003

Note: Type of Document - pdf; prepared on latex; pages: 26
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Web page: http://128.118.178.162

Related research

Keywords: Natural resources; Institutional quality; Growth; Rent-seeking;

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References

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  1. Paul Collier & Anke Hoeffler, 2004. "Greed and grievance in civil war," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 563-595, October.
  2. Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, American Economic Association, vol. 89(1), pages 22-46, March.
  3. Gylfason, Thorvaldur & Herbertsson, Tryggvi Thor & Zoega, Gylfi, 1997. "A Mixed Blessing: Natural Resources and Economic Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1668, C.E.P.R. Discussion Papers.
  4. 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.
  5. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, Elsevier, vol. 45(4-6), pages 827-838, May.
  6. Skaperdas, Stergios, 2001. "Warlord Competition," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  7. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
  8. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989. "Industrialization and the Big Push," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(5), pages 1003-26, October.
  9. Stijns, Jean-Philippe C., 2005. "Natural resource abundance and economic growth revisited," Resources Policy, Elsevier, Elsevier, vol. 30(2), pages 107-130, June.
  10. Acemoglu, Daron & Johnson, Simon & Robinson, James A, 2002. "An African Success Story: Botswana," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3219, C.E.P.R. Discussion Papers.
  11. Torvik, Ragnar, 2001. "Learning by doing and the Dutch disease," European Economic Review, Elsevier, Elsevier, vol. 45(2), pages 285-306, February.
  12. Lane, Frederic C., 1958. "Economic Consequences of Organized Violence," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 18(04), pages 401-417, December.
  13. Lane, Philip R & Tornell, Aaron, 1996. " Power, Growth, and the Voracity Effect," Journal of Economic Growth, Springer, Springer, vol. 1(2), pages 213-41, June.
  14. Gylfason, Thorvaldur & Herbertsson, Tryggvi Thor & Zoega, Gylfi, 1999. "A Mixed Blessing," Macroeconomic Dynamics, Cambridge University Press, Cambridge University Press, vol. 3(02), pages 204-225, June.
  15. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, Elsevier, vol. 67(2), pages 455-470, April.
  16. repec:cup:macdyn:v:3:y:1999:i:2:p:204-25 is not listed on IDEAS
  17. Sachs, Jeffrey D & Warner, Andrew M, 1997. "Sources of Slow Growth in African Economies," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 6(3), pages 335-76, October.
  18. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  19. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, Elsevier, vol. 61(2), pages 527-542, April.
  20. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, Elsevier, vol. 27(1-2), pages 41-55, October.
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  1. The Economic Nature of the Resource Curse: Evidence
    by Daron Acemoglu and James Robinson in Why Nations Fail on 2013-05-21 12:02:00
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