Institutions and the resource curse
Link to article:
Authors:
Mehlum, Halvor, Kalle Moene and Ragnar Torvik
Year:
2002
Reference:
Memorandum
Number in series: 29
Summary
Countries rich in natural resources constitute both growth losers and growth winners. We claim that the main reason for these diverging experiences is differences in the quality of institutions. More natural resources push aggregate income down, when institutions are grabber friendly, while more resources raise income, when institutions are producer friendly. We test this theory building on Sachs and Warner's influential works on the resource curse. Our main hypothesis: that institutions are decisive for the resource curse, is confirmed. Our results are in sharp contrast to the claim by Sachs and Warner that institutions do not play a role.
JEL:
O4, Q0, F43
Keywords:
Natural resources, Institutional quality, Growth, Rent-seeking
Project:
Oppdragsgiver:Oppdragsgivers prosjektnr.:
Frisch prosjekt:
Contact:
ragnar.torvik@svt.ntnu.no