IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/55381.html
   My bibliography  Save this paper

Can more be less? An experimental test of the resource curse

Author

Listed:
  • Al-Ubaydli, Omar
  • McCabe, Kevin
  • Twieg, Peter

Abstract

Several scholars have argued that abundant natural resources can be harmful to economic performance under bad institutions and helpful when institutions are good. These arguments have either been theoretical or based on naturally-occurring variation in natural resource wealth. We test this theory using a laboratory experiment to reap the benefits of randomized control. We conduct this experiment in a virtual world (Second LifeTM) to make institutions more visceral. We find support for the theory.

Suggested Citation

  • Al-Ubaydli, Omar & McCabe, Kevin & Twieg, Peter, 2014. "Can more be less? An experimental test of the resource curse," MPRA Paper 55381, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:55381
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/55381/1/MPRA_paper_55381.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Institutions and the Resource Curse," Economic Journal, Royal Economic Society, vol. 116(508), pages 1-20, January.
    2. Nti, Kofi O, 1997. "Comparative Statics of Contests and Rent-Seeking Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 43-59, February.
    3. Chesney, Thomas & Chuah, Swee-Hoon & Hoffmann, Robert, 2009. "Virtual world experimentation: An exploratory study," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 618-635, October.
    4. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
    5. Russell Cooper & Douglas V. DeJong & Robert Forsythe & Thomas W. Ross, 1992. "Communication in Coordination Games," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 739-771.
    6. Erik O. Kimbrough & Vernon L. Smith & Bart J. Wilson, 2008. "Historical Property Rights, Sociality, and the Emergence of Impersonal Exchange in Long-Distance Trade," American Economic Review, American Economic Association, vol. 98(3), pages 1009-1039, June.
    7. Hodler, Roland, 2006. "The curse of natural resources in fractionalized countries," European Economic Review, Elsevier, vol. 50(6), pages 1367-1386, August.
    8. Andersen, Jørgen Juel & Aslaksen, Silje, 2008. "Constitutions and the resource curse," Journal of Development Economics, Elsevier, vol. 87(2), pages 227-246, October.
    9. Vicente, Pedro C., 2010. "Does oil corrupt? Evidence from a natural experiment in West Africa," Journal of Development Economics, Elsevier, vol. 92(1), pages 28-38, May.
    10. Ostrom, Elinor & Walker, James & Gardner, Roy, 1992. "Covenants with and without a Sword: Self-Governance Is Possible," American Political Science Review, Cambridge University Press, vol. 86(2), pages 404-417, June.
    11. Potters, Jan & de Vries, Casper G. & van Winden, Frans, 1998. "An experimental examination of rational rent-seeking," European Journal of Political Economy, Elsevier, vol. 14(4), pages 783-800, November.
    12. Knapp, Gunnar & Murphy, James J., 2010. "Voluntary Approaches to Transitioning from Competitive Fisheries to Rights-Based Management: Bringing the Field into the Lab," Agricultural and Resource Economics Review, Cambridge University Press, vol. 39(2), pages 245-261, April.
    13. Olsson, Ola, 2007. "Conflict diamonds," Journal of Development Economics, Elsevier, vol. 82(2), pages 267-286, March.
    14. Elinor Ostrom, 2000. "Collective Action and the Evolution of Social Norms," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 137-158, Summer.
    15. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422.
    16. Charness, Gary & Grosskopf, Brit, 2004. "What makes cheap talk effective? Experimental evidence," Economics Letters, Elsevier, vol. 83(3), pages 383-389, June.
    17. Abhijit V. Banerjee & Esther Duflo, 2009. "The Experimental Approach to Development Economics," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 151-178, May.
    18. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    19. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1993. "The Solution to the Tullock Rent-Seeking Game when R > 2: Mixed Strategy Equilibria and Mean Dissipation Rates," Papers 10-93-9, Pennsylvania State - Department of Economics.
    20. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
    21. Fiedler, Marina & Haruvy, Ernan & Li, Sherry Xin, 2011. "Social distance in a virtual world experiment," Games and Economic Behavior, Elsevier, vol. 72(2), pages 400-426, June.
    22. Al-Ubaydli, Omar, 2012. "Natural resources and the tradeoff between authoritarianism and development," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 137-152.
    23. Ryan A. Compton & Daniel C. Giedeman & Noel D. Johnson, 2010. "Investing In Institutions," Economics and Politics, Wiley Blackwell, vol. 22(3), pages 419-445, November.
    24. Michael Alexeev & Robert Conrad, 2009. "The Elusive Curse of Oil," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 586-598, August.
    25. John Morgan & Martin Sefton, 2000. "Funding Public Goods with Lotteries: Experimental Evidence," Review of Economic Studies, Oxford University Press, vol. 67(4), pages 785-810.
    26. Ola Olsson, 2006. "Diamonds Are a Rebel's Best Friend," The World Economy, Wiley Blackwell, vol. 29(8), pages 1133-1150, August.
    27. Walker, James M. & Gardner, Roy & Ostrom, Elinor, 1990. "Rent dissipation in a limited-access common-pool resource: Experimental evidence," Journal of Environmental Economics and Management, Elsevier, vol. 19(3), pages 203-211, November.
    28. Blume, Andreas & Ortmann, Andreas, 2007. "The effects of costless pre-play communication: Experimental evidence from games with Pareto-ranked equilibria," Journal of Economic Theory, Elsevier, vol. 132(1), pages 274-290, January.
    29. repec:feb:natura:0059 is not listed on IDEAS
    30. Duffy, John & Feltovich, Nick, 2002. "Do Actions Speak Louder Than Words? An Experimental Comparison of Observation and Cheap Talk," Games and Economic Behavior, Elsevier, vol. 39(1), pages 1-27, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andreas Leibbrandt & John Lynham, 2018. "Does the paradox of plenty exist? Experimental evidence on the curse of resource abundance," Experimental Economics, Springer;Economic Science Association, vol. 21(2), pages 337-354, June.
    2. Innocenti, Alessandro, 2017. "Virtual reality experiments in economics," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 71-77.
    3. Haruvy, Ernan & Li, Sherry Xin & McCabe, Kevin & Twieg, Peter, 2017. "Communication and visibility in public goods provision," Games and Economic Behavior, Elsevier, vol. 105(C), pages 276-296.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Al-Ubaydli, Omar, 2012. "Natural resources and the tradeoff between authoritarianism and development," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 137-152.
    2. Andreas Leibbrandt & John Lynham, 2018. "Does the paradox of plenty exist? Experimental evidence on the curse of resource abundance," Experimental Economics, Springer;Economic Science Association, vol. 21(2), pages 337-354, June.
    3. Kaznacheev, Peter, 2013. "Resource Rents and Economic Growth: Economic and institutional development in countries with a high share of income from the sale of natural resources. Analysis and recommendations based on internatio," EconStor Research Reports 121950, ZBW - Leibniz Information Centre for Economics.
    4. Dong-Hyeon Kim & Shu-Chin Lin, 2017. "Natural Resources and Economic Development: New Panel Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(2), pages 363-391, February.
    5. Boschini, Anne & Pettersson, Jan & Roine, Jesper, 2013. "The Resource Curse and its Potential Reversal," World Development, Elsevier, vol. 43(C), pages 19-41.
    6. Carmignani, Fabrizio, 2013. "Development outcomes, resource abundance, and the transmission through inequality," Resource and Energy Economics, Elsevier, vol. 35(3), pages 412-428.
    7. Smith, Brock, 2015. "The resource curse exorcised: Evidence from a panel of countries," Journal of Development Economics, Elsevier, vol. 116(C), pages 57-73.
    8. Bhattacharyya, Sambit & Hodler, Roland, 2010. "Natural resources, democracy and corruption," European Economic Review, Elsevier, vol. 54(4), pages 608-621, May.
    9. Cockx, Lara & Francken, Nathalie, 2014. "Extending the concept of the resource curse: Natural resources and public spending on health," Ecological Economics, Elsevier, vol. 108(C), pages 136-149.
    10. Collier, Paul & Goderis, Benedikt, 2012. "Commodity prices and growth: An empirical investigation," European Economic Review, Elsevier, vol. 56(6), pages 1241-1260.
    11. Brunnschweiler, Christa N. & Bulte, Erwin H., 2008. "The resource curse revisited and revised: A tale of paradoxes and red herrings," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 248-264, May.
    12. Carl-Johan Dalgaard & Ola Olsson, 0. "Windfall Gains, Political Economy and Economic Development," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 17(suppl_1), pages -109.
    13. Seghir, Majda & Damette, Olivier, 2013. "Natural resource curse: a non linear approach in a panel of oil exporting countries," MPRA Paper 51604, University Library of Munich, Germany.
    14. Antonakakis, Nikolaos & Cunado, Juncal & Filis, George & Gracia, Fernando Perez de, 2017. "Oil dependence, quality of political institutions and economic growth: A panel VAR approach," Resources Policy, Elsevier, vol. 53(C), pages 147-163.
    15. Frederick Van der Ploeg, 2010. "Natural Resources: Curse or Blessing?," CESifo Working Paper Series 3125, CESifo.
    16. Dauvin, Magali & Guerreiro, David, 2017. "The Paradox of Plenty: A Meta-Analysis," World Development, Elsevier, vol. 94(C), pages 212-231.
    17. Fubing Su & Guoxue Wei & Ran Tao, 2016. "China and Natural Resource Curse in Developing Countries: Empirical Evidence from a Cross-country Study," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 24(1), pages 18-40, January.
    18. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    19. 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.
    20. Bhattacharyya, Sambit & Hodler, Roland, 2014. "Do Natural Resource Revenues Hinder Financial Development? The Role of Political Institutions," World Development, Elsevier, vol. 57(C), pages 101-113.

    More about this item

    Keywords

    resource curse; institutions; economic development;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Kevin McCabe (economist) in Wikipedia English

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:55381. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.