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The Natural Resource Curse Revisited: Is There a Financial Channel?

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  • Hattendorff, Christian

Abstract

The paper contributes to the ongoing debate on the natural resource curse, which refers to a negative link between natural resource abundance and economic growth. It shows empirically that resource-rich countries appear to have a less developed financial system and investigates a potential mechanism by applying insights from the finance and trade literature. It tests whether the resource sectors' lower demand of short-term external credit negatively affects financial development of a resource-based economy. This is done with cross-sectional and panel analysis, using an instrument for credit demand based on exogenous geographic determinants. The results, however, suggest that export concentration rather than firms' credit demand drives the detrimental effect of resources on finance.

Suggested Citation

  • Hattendorff, Christian, 2013. "The Natural Resource Curse Revisited: Is There a Financial Channel?," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79805, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc13:79805
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    References listed on IDEAS

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    Cited by:

    1. elias elhannani, farah & boussalem, abou bakr & Benbouziane, Mohamed, 2016. "Financial development and the oil curse: Evidence from Algeria," MPRA Paper 81866, University Library of Munich, Germany, revised May 2016.
    2. Alssadek, Marwan & Benhin, James, 2023. "Natural resource curse: A literature survey and comparative assessment of regional groupings of oil-rich countries," Resources Policy, Elsevier, vol. 84(C).

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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