We provide cross-country evidence that rejects the traditional interpretation of the natural resource curse. First, growth depends negatively on volatility of unanticipated output growth independent of initial income, investment, human capital, trade openness, natural resource dependence, and population growth. Second, the direct positive effect of resources on growth is swamped by the indirect negative effect through volatility. Third, with well developed financial sectors, the resource curse is less pronounced. Forth, landlocked countries with ethnic tensions have higher volatility and lower growth. Fifth, restriction on the current account raise volatility and depress growth whereas capital account restrictions lower volatility and boost growth. Our key message is thus that volatility is a quintessential feature of the resource curse.』
2. why might the volatility of natural resource revenues hamper growth?
2.1. Economic arguments
2.2. Political arguments
3. Is the traditional natural resource curse a red herring?
4. Is volatility the quintessential feature of the natural resource curse?
4.1. Volatility is the key channel for the resource curse
4.2. Volatility of commodity export shares and macroeconomic volatility
4.3. Impact of ethic tensions and economic restrictions on volatility and growth
5. Accounting for growth performance: Africa versus southeast Asian countries
6. Concluding remarks
Appendix 3. Econometric methodology