Natural Resources: Curse or Blessing?

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

2,185 citations recorded by the source corpus.

Are natural resources a “curse” or a “blessing”? The empirical evidence suggests either outcome is possible. The paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. These include that a resource bonanza induces appreciation of the real exchange rate, deindustrialization and bad growth prospects, and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law, corruption, presidential democracies, and underdeveloped financial systems. Another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad, induces corruption especially in non-democratic countries, and keeps in place bad policies. Finally, resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets. The survey also offers some welfare-based fiscal rules for harnessing resource windfalls in developed and developing economies.

View Paper: https://www.semanticscholar.org/paper/e40a56392775ec7c9c48c57146a00cbc44c6ed99

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Citations in the corpus

The Impact of Natural Resources: Survey of Recent Quantitative Evidence (2017, background): “…of law, ethnic fractionalisation, armed conflict – especially if natural resource wealth is large relative to the opportunity cost of fighting (the wage) –, badly developed financial systems and crowding out of growth-promoting foreign direct investment (FDI) (as surveyed in Van Der Ploeg, 2011).”
Economic Freedom and Productivity Growth in Resource-rich Economies (2015, background): “There are several economic and political explanations of the natural resource curse; see Frankel (2010) and van der Ploeg (2011) for comprehensive surveys.”
Provision of electricity to African households: The importance of democracy and institutional quality (2015, background): “…curse” literature, where the argument has been made that in the absence of good democratic institutions (e.g., rule of law, lack of corruption, conflict management etc.) exploitation of natural resources could provide meagre opportunities for public benefits (Auty, 2001; Van der Ploeg, 2011).”
The role of country-level institutional factors in escaping the natural resource curse: Insights from Ghana (2019, background): “…on transparency and accountability, including efficient and equitable management of natural resource wealth in developing countries as being the antidote to the natural resource sustainability (Torvik, 2002, 2009; Collier et al., 2011; van der Ploeg, 2011; Ackah-Baidoo, 2012; Corrigan, 2014).”
Tax me, but spend wisely? Sources of public finance and government accountability (2015, background): “7The results are also consistent with the literature on the natural resource curse which finds that governments’ revenues from the exploitation of natural resources are typically are wasted or diverted (Van der Ploeg, 2011).”
The Resource Curse Exorcised: Evidence from a Panel of Countries (2015, result): “Although recent studies have called into question the existence of a resource curse (see the following section, and van der Ploeg, 2011 for a survey), much of the literature on natural resources and growth has more or less taken the Sachs & Warner (1995) result as given and extended their design in…”