Cursed by Resources or Institutions?

Peer-reviewed Journal Article

Moene, Karl Ove;Mehlum, Halvor; & Torvik, Ragnar (2006) Cursed by Resources or Institutions? , World Economy 29(8): 1117–1131.

Natural resource-abundant countries constitute both growth losers and growth winners, and the main difference between the success cases and the cases of failure lies in the quality of institutions. With grabber-friendly institutions more natural resources push aggregate income down, while with producer-friendly institutions more natural resources increase income. Such a theory finds strong support in data. A key question we also discuss is if resources in addition alter the quality of institutions. When that is the case, countries with bad institutions suffer a double resource curse - as the deterioration of institutions strengthens the negative effect of more natural resources.

Authors

Halvor Mehlum

Halvor Mehlum

Research Economist, Department of Economics, University of Oslo

Karl Ove Moene

Karl Ove Moene

Working Group Leader: Conflict and Economic Performance. Professor of Economics, University of Oslo

Ragnar Torvik

Ragnar Torvik

Professor of Economics NTNU