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Title:Natural resources: Curse or blessing? PDF Logo
Authors:van der Ploeg, Frederick
Issue Date:2010
Series/Report no.:CESifo working paper Resources and Environment 3125
Abstract:Are natural resources a 'curse' or a 'blessing'? The empirical evidence suggests either outcome is possible. The paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. These include that a resource bonanza induces appreciation of the real exchange rate, deindustrialization and bad growth prospects, and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law, corruption, presidential democracies, and underdeveloped financial systems. Another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad, induces corruption especially in non-democratic countries, and keeps in place bad policies. Finally, resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets. The survey also offers some welfare-based fiscal rules for harnessing resource windfalls in developed and developing economies.
Subjects:resource curse
cross-country
panel and quasi-experimental evidence
Dutch disease
institutions
corruption
financial development
volatility
Hotelling rule
genuine saving
Hartwick rule
natural resource wealth management
sustainable development
JEL:C12
C13
E01
F43
K42
O41
Q30
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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