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Are Rich Countries Immune to the Resource Curse? Evidence from Norway's Management of Its Oil Riches

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Growth studies show, counter to intuition, that the discovery of a natural resource may be a curse rather than a blessing since resource-rich countries grow slower than others. But it has been suggested that Norway may be an important exception to the curse and that the curse does not afflict rich countries. This article addresses both issues, and introduces a new diagnostic test. Neighbor countries Denmark and Sweden are used to highlight Norway's relative development and to test for curse presence. I employ a structural break technique to demonstrate that Norway started an acceleration in the early 70s, after having discovered oil in 1969, and did not experience a pronounced retardation for the next 25 years. Instead, after first catching-up with its neighbors, Norway maintained a higher pace of growth. Norway might have escaped the curse. However, data suggest a slow-down at the end of the period, opening the possibility of a late onset of the curse. If so, rich countries are not immune.

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  • Erling Røed Larsen, 2003. "Are Rich Countries Immune to the Resource Curse? Evidence from Norway's Management of Its Oil Riches," Discussion Papers 362, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:362
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    Cited by:

    1. Frankel, Jeffrey A., 2010. "The Natural Resource Curse: A Survey," Scholarly Articles 4454156, Harvard Kennedy School of Government.
    2. Jørgen Juel Andersen, 2013. "The Dutch disease and intergenerational welfare," Applied Economics, Taylor & Francis Journals, vol. 45(4), pages 465-476, February.

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    More about this item

    Keywords

    booming sector; catch-up; counterfactual development; economic parity; economic growth; gross domestic product; immunity; natural experiment; natural resource curse; oil discovery; structural break;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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