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Addressing the Natural Resource Curse; An Illustration From Nigeria

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  • Arvind Subramanian
  • Xavier Sala-i-Martin

Abstract

Some natural resources-oil and minerals in particular-exert a negative and nonlinear impact on growth via their deleterious impact on institutional quality. We show this result to be very robust. The Nigerian experience provides telling confirmation of this aspect of natural resources. Waste and poor institutional quality stemming from oil appear to have been primarily responsible for Nigeria's poor long-run economic performance. We propose a solution for addressing this resource curse which involves directly distributing the oil revenues to the public. Even with all the difficulties that will no doubt plague its actual implementation, our proposal will, at the least, be vastly superior to the status quo. At best, however, it could fundamentally improve the quality of public institutions and, as a result, durably raise long-run growth performance.

Suggested Citation

  • Arvind Subramanian & Xavier Sala-i-Martin, 2003. "Addressing the Natural Resource Curse; An Illustration From Nigeria," IMF Working Papers 03/139, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:03/139
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic development; Oil; Nigeria; Natural resources; institutions; growth; natural resource; oil revenues; oil prices; natural gas; Economywide Country Studies: Africa; Comparative Studies of Countries; Economic Growth and Aggregate Productivity; Economywide Country Studies;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General

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