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Cursed by Resources or Institutions?

  • Halvor Mehlum
  • Karl Moene
  • Ragnar Torvik

Natural resource-abundant countries constitute both growth losers and growth winners, and the main difference between the success cases and the cases of failure lies in the quality of institutions. With grabber-friendly institutions more natural resources push aggregate income down, while with producer-friendly institutions more natural resources increase income. Such a theory finds strong support in data. A key question we also discuss is if resources in addition alter the quality of institutions. When that is the case, countries with bad institutions suffer a double resource curse - as the deterioration of institutions strengthens the negative effect of more natural resources. Copyright 2006 The Authors Journal compilation 2006 Blackwell Publishing Ltd.

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File URL: http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-9701.2006.00808.x
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Article provided by Wiley Blackwell in its journal World Economy.

Volume (Year): 29 (2006)
Issue (Month): 8 (08)
Pages: 1117-1131

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Handle: RePEc:bla:worlde:v:29:y:2006:i:8:p:1117-1131
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