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Natural Capital and the Resource Curse

Author

Listed:
  • Canuto, Otaviano

    (World Bank)

  • Cavallari, Matheus

    (World Bank)

Abstract

An abundance of natural resources is intuitively expected to be a blessing. Nonetheless, it has been argued for some decades that large endowments of natural resources—oil, gas, and minerals in particular—may actually become more of a curse, often leading to slow economic growth and redistributive struggles (including armed conflict). Over the years, vast empirical literature has addressed this “paradox.” The literature has had to rely on proxies for natural resource abundance because of the lack of appropriate data, generating doubt on whether results would be similar if direct measures of natural wealth were available. This gap is now starting to be filled with the data series released by the World Bank (1997, 2006, 2011) on natural capital and other forms of countries’ wealth. This note presents an analysis of these data to revisit some of the conclusions reached in the literature on the relationship between natural resource abundance and economic growth. The findings are in alignment with the view that there is no clear deterministic evidence of natural resource abundance as a curse or a blessing; therefore, the effect on a country depends on other determinants.

Suggested Citation

  • Canuto, Otaviano & Cavallari, Matheus, 2012. "Natural Capital and the Resource Curse," World Bank - Economic Premise, The World Bank, issue 83, pages 1-6, May.
    • Handle: RePEc:wbk:prmecp:ep83
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    References listed on IDEAS

    as
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    Cited by:

    1. Otaviano Canuto & Christos Daoulas, 2019. "Natural Wealth and Economic Growth: The Case of Sub-Saharan Africa," Research papers & Policy papers on Economic Trends and Policies 1911, Policy Center for the New South.
    2. Nhlangwini, Pamela & Mongale, Itumeleng Pleasure, 2019. "Mining Production and Economic Growth Nexus," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(3), pages 103-116.
    3. repec:ocp:rpecon:rp_05-24 is not listed on IDEAS
    4. Andersson, Martin & Palacio, Andrés, 2019. "The Revival of Agriculture and Inclusive Growth during the Commodity Boom in Latin America?," Lund Papers in Economic History 208, Lund University, Department of Economic History.
    5. Otaviano Canuto & Christos Daoulas, 2019. "Natural Wealth and Economic Growth: The Case of Sub-Saharan Africa," Research papers & Policy papers on Commodities & Energy 1904, Policy Center for the New South.
    6. repec:ocp:rpaper:rp-0524 is not listed on IDEAS
    7. Óscar Afonso & Liliana Fonseca & Manuela Magalhães & Paulo B. Vasconcelos, 2021. "Directed technical change and environmental quality," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 20(1), pages 71-97, January.
    8. repec:jle:journl:121 is not listed on IDEAS
    9. Al Raee, Mueid & De Crombrugghe, Denis & Ritzen, Jo, 2019. "No evidence of an oil curse: Natural resource abundance, capital formation and productivity," MERIT Working Papers 2019-023, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. repec:ocp:rpecon:pp_19-12 is not listed on IDEAS
    11. Mahadeva Lavan, 2014. "Why does natural resource abundance not always lead to better outcomes? Limited financial development versus political impatience," The B.E. Journal of Macroeconomics, De Gruyter, vol. 14(1), pages 341-377, January.

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