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Cursed by resources or institutions?

Author

Listed:
  • Halvor Mehlum

    (Department of Economics, University of Oslo, Norway)

  • Karl Ove Moene

    (Department of Economics, University of Oslo, Norway)

  • Ragnar Torvik

    (Department of Economics, Norwegian University of Science and Technology)

Abstract

Natural resource abundant countries constitute both growth losers and growth winners, and the main difference between the success cases and the cases of failure lays 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 strenghtens the negative effect of more natural resources.

Suggested Citation

  • Halvor Mehlum & Karl Ove Moene & Ragnar Torvik, 2005. "Cursed by resources or institutions?," Working Paper Series 5705, Department of Economics, Norwegian University of Science and Technology.
  • Handle: RePEc:nst:samfok:5705
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    More about this item

    Keywords

    Natural resources; Institutional quality; Growth; Rent-seeking;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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