This paper shows that whether natural resources are good or bad for a country's development crucially depends on the interaction between institutional setting and the type of resources possessed by the country. Some natural resources are, for economical and technical reasons, more likely to cause problems such as rent-seeking and conflicts than others. This potential problem can, however, be countered by good institutional quality. In contrast to the traditional resource curse hypothesis, we show the impact of natural resources on economic growth to be non-monotonic in institutional quality. Countries rich in minerals are cursed only if they have low quality institutions, while the curse is reversed if institutions are sufficiently good.
Keywords: Natural resources; Appropriability; Property rights; Institutions; Economic growth; Development』
2. Related literature
3. Our hypothesis and data
The institutional dimension of appropriability
The technical dimension of appropriability
4. Main results
5. Robustness of the results
5.1. Excluding the developed countries
5.2. Are Botswana and Sierra Leone driving the results?
5.3. Is Africa (or Latin America) responsible for our results?
5.4. Importance of civil wars
5.5. Robustness to other institutional measures
6. Summary and concluding remarks
Appendix A. Sources and summary statistics