Cursing the Blessings? Natural Resource Abundance, Institutions, and Economic Growth

SummarySince Sachs and Warner’s [Sachs, J. D., & Warner, A. M. (1995a). Natural resource abundance and economic growth. NBER working paper, no. 5398] contribution, there has been a lively debate on the so-called natural resource curse. This paper re-examines the effects of natural resource abundance on economic growth using new measures of resource endowment and considering the role of institutional quality. We find a positive direct empirical relationship between natural resource abundance and economic growth. In both OLS and 2SLS regressions, the positive resource effects are particularly strong for subsoil wealth. Our results also show no evidence of negative indirect effects of natural resources through the institutional channel.