Shining a Light on the Resource Curse: An Empirical Analysis of the Relationship Between Natural Resources, Transparency, and Economic Growth

SummaryOne of the most common policy prescriptions for overcoming the so-called “resource curse,” particularly for extractive industries, has been to call for greater transparency and accountability from governments. However, despite the conceptual attraction of this policy, it has never been empirically proven that resource-rich countries are actually less transparent than other countries, and whether this lack of transparency has had a significant negative effect on economic growth. Using a relatively new index of transparency that has extensive coverage, both across countries and time, the results suggest a strong and robust negative causal association running from (point) resource export revenues to transparency. Furthermore, there is also some evidence that this lack of transparency is associated with a subsequent decrease in economic growth.