『Abstract
Brunnschweiler and Bulte (2008) provide cross-country evidence
that the resource curse is a "red herring" once one
corrects for the endogeneity of natural resource exports and allows
resource abundance to have an effect on growth. Their results
show that resource exports are no longer significant while the
value of subsoil assets has a significant positive effect on growth.
But the measure of subsoil assets that has been used is based
on World Bank estimates of natural capital, which are valued as
proportional to current rents, and thus also endogeneous. Furthermore,
their results may suffer from omitted variables bias, weakness
of the instruments, violation of exclusion restrictions and misspecification
error. Correcting for these issues and instrumenting resource
exports with values of proven reserves at the beginning of the
sample period; there is no evidence for the resource curse either
and subsoil assets are no longer significant. However, we provide
evidence that resource dependence leads to more volatility and
thus indirectly to worse growth prospects.
Keywords: resource curse; resource exports; resource rents; natural
capital; subsoil assets; reserves; instrumental variables; volatility』
1. Introduction
2. How is the World Bank measure of natural capital constructed?
3. Can natural capital and subsoil assets really be viewed as
truly exogenous variables?
4. Re-examining the natural resource curse with genuine data on
subsoil assets
5. Volatility seems to be quintessence of the resource curse
6. Conclusion
References
Appendix 1: Extraction costs and sustainability of natural
resources
Appendix 2: Description of data
Appendix 3: Descriptive statistics