Natural Resources and Economic Development: New Panel Evidence

• Published in: Environmental & resource economics Vol. 66; no. 2; pp. 363 - 391
• Main Authors: Kim, Dong-Hyeon, Lin, Shu-Chin
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer Netherlands 01.02.2017; Springer Nature B.V
• Subjects: Business cycles; Corruption; Developing countries; Economic development; Economic growth; Economic models; Economic Policy; Economic statistics; Economic theory; Economics; Economics and Finance; Endowment; Environmental Economics; Environmental Law/Policy/Ecojustice; Environmental Management; Globalization; growth and development; Heterogeneity; LDCs; Manufacturing; Natural resources; Political power; Property rights; Rent-seeking; Studies; Variables; Natural resources; O13; Q34; Heterogeneous panel cointegration; C23; Economic development
• ISSN: 0924-6460; 1573-1502
• DOI: 10.1007/s10640-015-9954-5

The question as to whether natural resources are a curse on economic growth and development is subject to considerable debates and remains controversial. Using heterogeneous panel cointegration techniques, this paper provides a fresh re-examination of the resource curse while allowing for cross-section heterogeneity and commonalities in the nexus between natural resource abundance and economic development. It finds, in a sample of developing countries, that economies endowed with abundant natural resources tend to develop more slowly than countries with scarce resources. Natural resources are, on average, a curse. However, there is considerable heterogeneity in the effects of resource abundance on economic development across countries, perhaps because of differences in the extent of government intervention, access to sound money, legal structures and the security of property rights, the degree of globalization, and/or corruption.