Do Natural Resources Depress Income Per Capita?

By Rabah Arezki, F. van der ploeg. Social Science Research Network, 2011

171 citations recorded by the source corpus.

Most evidence for the resource curse comes from cross-country growth regressions suffers from a bias originating from the high and ever-evolving volatility in commodity prices. This paper addresses these issues by providing new cross-country empirical evidence for the effect of resources in income per capita. Natural resource dependence (resource exports) has a significant negative effect on income per capita, especially in countries with bad rule of law or bad policies, but these results weaken substantially once we allow for endogeneity. However, the more exogenous measure of resource abundance (stock of natural capital) has a significant negative effect on income per capita even after controlling for geography, rule of law and de facto or de jure trade openness. Furthermore, this effect is more severe for countries that have little de jure trade openness. These results are robust to using alternative measures of institutional quality (expropriation and corruption instead of rule of law).

Subfields: Building and Construction, Development, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/b914741c921809ddc96719d81b747eeae8b8075c

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Building and Construction

1. E. Papyrakis
2. S. Lin
3. Donghyeon Kim
4. E. Gilberthorpe
5. Atsushi Iimi

In Development

1. S. Lin
2. E. Papyrakis
3. Donghyeon Kim
4. E. Gilberthorpe

In Economics and Econometrics

1. Donghyeon Kim
2. S. Lin
3. E. Papyrakis
4. E. Gilberthorpe
5. D. Sakyi
6. A. Maza
7. J. Villaverde
8. Muhammad Shahbaz

Citations in the corpus

• The extractive industries and development: The resource curse at the micro, meso and macro levels (2015, background): “Some other cross-country econometric studies linked mineral resources with the observed variation in income (GDP per capita) levels rather than growth patterns (Arezki and van der Ploeg, 2008, 2011; Carmignani and Chowdhury, 2012).”
• Natural Resources and Economic Development: New Panel Evidence (2015, background): “…produces clear evidence of a resource curse (Sala-i-Martin 1997; Papyrakis and Gerlagh 2004, 2007; Bulte et al. 2005; Ding and Field 2005; Arezki and Ploeg 2011) and provides evidence that the curse primarily operates by undermining the quality of a country’s governing institutions,…”