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Resource Curses Finance. Can Humans Stop It?

In: Emerging Markets and Financial Resilience

Author

Listed:
  • Tamat Sarmidi
  • Siong-Hook Law
  • Norlida Hanim Mohd Salleh

Abstract

Natural resource-rich countries shall enjoy better economic growth and socio-economic welfare than those that are less fortunate. Natural resources that have been endowed to these countries should be a genuine source of fortune and happiness. Surprisingly, everyday experiences and empirical studies show the reverse (Frankel, 2010). It seems that natural resource abundance is detrimental to economic growth. This puzzling phenomenon is known as the natural resource curse (NRC) hypothesis. In the past decades it has attracted voluminous research papers that try to empirically show the prevalence of the NRC and at the same time attempt to provide analytical explanations of why the NRC existed in the resource-abundant economies (Sachs & Warner, 1995; Leite & Weidmann, 1999; Gylfason, 2001; Gylfason & Zoega, 2006). In the literature, it is suggested that there are at least three theories explaining the NRC: ‘Dutch disease’ models (Sachs & Warner, 1999), rent-seeking phenomena (Tornell & Lane, 2000), and institutional explanations (Sachs & Warner, 1995, 2001). However, the empirical findings from these studies are still far from conclusive.

Suggested Citation

  • Tamat Sarmidi & Siong-Hook Law & Norlida Hanim Mohd Salleh, 2013. "Resource Curses Finance. Can Humans Stop It?," Palgrave Macmillan Books, in: Chee-Wooi Hooy & Ruhani Ali & S. Ghon Rhee (ed.), Emerging Markets and Financial Resilience, chapter 3, pages 38-50, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-26661-3_3
    DOI: 10.1057/9781137266613_3
    as

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