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Is a negative correlation between resource abundance and growth sufficient evidence that there is a "resource curse"?

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  • Boyce, John R.
  • Herbert Emery, J.C.

Abstract

Evidence from cross-sectional growth regressions suggests that economies dependent on natural resource exports have had slower growth than resource scarce economies. Explanations for this "curse of resources" focus on institutional and market failures caused by resource abundance. With a simple two sector model exhaustible resource model, we demonstrate that the correlation between growth and natural resource abundance can be negative in the absence of market and institutional failures. Since there is no way to distinguish between efficient and inefficient equilibria on the basis of the negative correlation between growth and resource abundance, finding that correlation is not sufficient to conclude resources are a curse, nor is it necessary to find a positive correlation between growth and resources to overturn the resource curse interpretation. We show whether resources are a curse or a blessing for an economy can only be determined by an investigation of the correlation between resource abundance and income levels. Using panel data for U.S. states for the period 1970-2001, we show that resource abundance is negatively correlated with growth rates but positively correlated with income levels.

Suggested Citation

  • Boyce, John R. & Herbert Emery, J.C., 2011. "Is a negative correlation between resource abundance and growth sufficient evidence that there is a "resource curse"?," Resources Policy, Elsevier, vol. 36(1), pages 1-13, March.
  • Handle: RePEc:eee:jrpoli:v:36:y:2011:i:1:p:1-13
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    Cited by:

    1. Blanco, Luisa & Grier, Robin, 2012. "Natural resource dependence and the accumulation of physical and human capital in Latin America," Resources Policy, Elsevier, vol. 37(3), pages 281-295.
    2. Badeeb, Ramez Abubakr & Lean, Hooi Hooi & Clark, Jeremy, 2017. "The evolution of the natural resource curse thesis: A critical literature survey," Resources Policy, Elsevier, vol. 51(C), pages 123-134.
    3. Ouedraogo, Abdoulaye, 2016. "Local economic impact of boom and bust in mineral resource extraction in the United States: A spatial econometrics analysis," Resources Policy, Elsevier, vol. 50(C), pages 292-305.
    4. Pomfret, Richard, 2012. "Resource management and transition in Central Asia, Azerbaijan and Mongolia," Journal of Asian Economics, Elsevier, vol. 23(2), pages 146-156.
    5. repec:eee:energy:v:141:y:2017:i:c:p:423-434 is not listed on IDEAS
    6. Ramírez Cendrero, Juan M., 2014. "Has Bolivia׳s 2006–12 gas policy been useful to combat the resource curse?," Resources Policy, Elsevier, vol. 41(C), pages 113-123.
    7. Tsvetkova, Alexandra & Partridge, Mark, 2017. "The shale revolution and entrepreneurship: An assessment of the relationship between energy sector expansion and small business entrepreneurship in US counties," Energy, Elsevier, vol. 141(C), pages 423-434.
    8. Tsvetkova, Alexandra & Partridge, Mark D., 2016. "Economics of modern energy boomtowns: Do oil and gas shocks differ from shocks in the rest of the economy?," Energy Economics, Elsevier, vol. 59(C), pages 81-95.
    9. repec:eee:jrpoli:v:52:y:2017:i:c:p:122-133 is not listed on IDEAS
    10. James, Alexander, 2015. "The resource curse: A statistical mirage?," Journal of Development Economics, Elsevier, vol. 114(C), pages 55-63.
    11. repec:eee:jrpoli:v:53:y:2017:i:c:p:147-163 is not listed on IDEAS
    12. Ramírez-Cendrero, Juan M. & Wirth, Eszter, 2016. "Is the Norwegian model exportable to combat Dutch disease?," Resources Policy, Elsevier, vol. 48(C), pages 85-96.
    13. Liu, Yaobin, 2014. "Is the natural resource production a blessing or curse for China's urbanization? Evidence from a space–time panel data model," Economic Modelling, Elsevier, vol. 38(C), pages 404-416.
    14. James, Alexander, 2016. "The long-run vanity of Prudhoe Bay," Resources Policy, Elsevier, vol. 50(C), pages 270-275.
    15. Breyel, Corinna & Grigoriadis, Theocharis, 2016. "Foreign agents? Natural resources & the political economy of civil society," Discussion Papers 2016/18, Free University Berlin, School of Business & Economics.

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