The curse of natural resources is a well-documented phenomenon in developing countries. Economies that are richly endowed with natural resources tend to grow slowly. Among the transition economies of the former “Eastern Bloc”, a similar pattern can be observed. This paper shows that a large part of the variation in growth rates among the transition economies can be attributed to the curse of natural resources. After controlling for numerous other factors, there is still a strong negative correlation between natural resource abundance and economic growth. Among the transition economies the prime reason for the curse of natural resource is corruption. Other reasons for the curse of natural resources may be Dutch disease effect and a neglect of education.
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Find related papers by JEL classification: O0 - Economic Development, Technological Change, and Growth - - General P2 - Economic Systems - - Socialist Systems and Transition Economies Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
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