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Resource Abundance, Poverty and Development

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  • Erwin H. Bulte
  • Richard Damania
  • Robert T. Deacon

Abstract

The negative correlation between resource endowments and GDP growth remains one of the most robust findings in the empirical growth literature, and has been coined the “resource curse hypothesis”. The policy consequences of this result are potentially far reaching. If natural resources are an inescapable curse, this may imply that countries richly endowed with natural resources can only develop by turning their backs on their comparative advantage and diversifying into other non-resource based activities. This papers analyzes whether the negative statistical relationship between natural resource abundance and economic growth spills over to other important economic and social indicators. The impact of resource wealth on several proxies of economic underdevelopment and welfare are scrutinized. While underdevelopment and welfare are clearly not independent of economic growth, it is known that there exist important differences between these variables. The research presented in this paper represents a step forward in the understanding of the resource curse, and the channels through which it is manifested.

Suggested Citation

  • Erwin H. Bulte & Richard Damania & Robert T. Deacon, 2004. "Resource Abundance, Poverty and Development," Working Papers 04-03, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    • Handle: RePEc:fao:wpaper:0403
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    2. Lubna Hasan, 2007. "Myths and Realities of Long-run Development: A Look at Deeper Determinants," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(1), pages 19-44.
    3. Fakhri J. Hasanov & Jeyhun I. Mikayilov & Sabuhi Yusifov & Khatai Aliyev & Samra Talishinskaya, 2019. "The role of social and physical infrastructure spending in tradable and non-tradable growth," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 13(1), March.
    4. Katharina Wick & Erwin Bulte, 2006. "Contesting resources – rent seeking, conflict and the natural resource curse," Public Choice, Springer, vol. 128(3), pages 457-476, September.
    5. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Cursed by Resources or Institutions?," The World Economy, Wiley Blackwell, vol. 29(8), pages 1117-1131, August.
    6. Natalie Stoeckl & Michelle Esparon & Marina Farr & Aurélie Delisle & Owen Stanley, 2014. "The great asymmetric divide: An empirical investigation of the link between indigenous and non-indigenous economic systems in Northern Australia," Papers in Regional Science, Wiley Blackwell, vol. 93(4), pages 783-801, November.
    7. Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2009. "Концентрация Доходов, Нестабильность Демократии И Экономический Рост [Income Concentration, Instability of Democracy and the Economic Growth]," MPRA Paper 27561, University Library of Munich, Germany.
    8. Andersen, Jørgen Juel & Aslaksen, Silje, 2008. "Constitutions and the resource curse," Journal of Development Economics, Elsevier, vol. 87(2), pages 227-246, October.
    9. Yacine Belarbi & Lylia Sami & Said Souam, 2015. "Effects of Institutions and Natural Resources in a Multiple Growth Regime," Working Papers 905, Economic Research Forum, revised Apr 2015.
    10. Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2008. "Mechanisms of Resource Curse, Economic Policy and Growth," MPRA Paper 20570, University Library of Munich, Germany.
    11. Naima Sadaoui & Lotfi Zabat & Habib Sekrafi & Mehdi Abid, 2024. "The moderating role of natural resources between governance and CO2 emissions: Evidence from MENA countries," Energy & Environment, , vol. 35(3), pages 1597-1615, May.
    12. Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2007. "Resource Abundance, Political Corruption, and Instability of Democracy," MPRA Paper 19154, University Library of Munich, Germany.
    13. Antoci, Angelo & Russu, Paolo & Ticci, Elisa, 2008. "Structural Change, Environment and Well-being: Interactions Between Production and Consumption Choices of the Rich and the Poor in Developing Countries," Sustainability Indicators and Environmental Valuation Working Papers 37671, Fondazione Eni Enrico Mattei (FEEM).
    14. Полтерович В. М. & Попов В. В. & Тонис А. С., 2008. "Нестабильность Демократии В Странах, Богатых Ресурсами," Higher School of Economics Economic Journal Экономический журнал Высшей школы экономики, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 12(2), pages 176-200.
    15. Abdul HANNAN* & Hasan M. MOHSIN**, 2015. "Regional Analysis of Resource Curse Hypothesis: Evidence from Panel Data," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 25(1), pages 45-66.
    16. Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2007. "Экономическая Политика, Качество Институтов И Механизмы "Ресурсного Проклятия" [Economic Policy, Quality of Institutions, and Mechanisms of Resource Curse]," MPRA Paper 22454, University Library of Munich, Germany.
    17. Stevens, Paul & Dietsche, Evelyn, 2008. "Resource curse: An analysis of causes, experiences and possible ways forward," Energy Policy, Elsevier, vol. 36(1), pages 56-65, January.
    18. Chala Amante Abate & Dagim Tadesse Bekele & Belisty Bekalu Ayenew & Adisu Abebaw Degu, 2023. "The Relationship Between Natural Resource Rent and Economic Growth in Nigeria," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 13(4), pages 3-25.
    19. Ogunleye, Eric Kehinde, 2008. "Natural resource abundance in Nigeria: From dependence to development," Resources Policy, Elsevier, vol. 33(3), pages 168-174, September.
    20. Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2009. "Instability of Democracy as Resource Curse," MPRA Paper 22069, University Library of Munich, Germany.
    21. Deacon, Robert & Mueller, Bernardo, 2004. "Political Economy and Natural Resource Use," University of California at Santa Barbara, Economics Working Paper Series qt68g1n1v8, Department of Economics, UC Santa Barbara.

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    More about this item

    Keywords

    Agricultural development; Developing countries; Development policies; Economic analysis; Economic development; Economic growth; Natural resources; Poverty; Rural development; Resource Abundance. Social welfare;
    All these keywords.

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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