‘Rich’ countries, poor people? An empirical study on the resource curse hypothesis

Natural resource analysis has been a topic of discussion for several years. One of these issues is the natural resource curse hypothesis. This hypothesis states that countries having an abundance of natural resources have lower rates of economic growth relative to countries with no resources. This research investigates the existence of a resource curse empirically. Using a country dataset, different methods have been applied in order to find evidence of a resource curse. To obtain more reliable results, different measurements for resources are used including resources in per capita terms, and both cross-sectional and panel data methods are analyzed. Special attention is given to institutions and their indirect effect on resources and growth. No strong evidence is found to support the existence of a resource curse. In the panel data model, a significant positive relationship is found between resources and growth, whereas in the cross-sectional model, there is no clear relationship. When including an interaction term for institutions, the positive relationship remains in the panel data model. The cross-sectional model provides negative coefficients thus supporting the resource curse hypothesis: for subsoil assets, in particular, it is shown that institutions influence the negative effects on growth rates