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Institutions and the resource curse

Author

Listed:
  • 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.

Suggested Citation

  • Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Institutions and the resource curse," GE, Growth, Math methods 0210004, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpge:0210004
    Note: Type of Document - pdf; prepared on latex; pages: 26
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Natural resources; Institutional quality; Growth; Rent-seeking;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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