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The Resource Curse Exorcised: Evidence from a Panel of Countries

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  • Brock Smith

Abstract

This paper evaluates the impact of major natural resource discoveries since 1950 on GDP per capita and its proximate causes. Using panel fixed-effects estimation and resource discoveries in countries that were not previously resource-rich as a plausibly exogenous source of variation, I find a positive effect on GDP per capita levels following resource exploitation that persists in the long term. Results vary significantly between OECD and non-OECD treatment countries, with effects concentrated within the non-OECD group. I further test GDP effects with synthetic control analysis on each individual treated country, yielding results consistent with the average effects found with the fixed-effects model. Productivity, capital formation and education were also positively affected by resource discovery, while growth accounting analysis suggests productivity gains were a major distinguishing factor in GDP effects.

Suggested Citation

  • Brock Smith, 2016. "The Resource Curse Exorcised: Evidence from a Panel of Countries," OxCarre Working Papers 165, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  • Handle: RePEc:oxf:oxcrwp:165
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    File URL: https://www.economics.ox.ac.uk/materials/OxCarre/ResearchPapers/oxcarrerp2015165.pdf
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    Keywords

    natural resource curse; economic growth; growth regressions; growth accounting; oil;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • Q37 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Issues in International Trade

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