Can resource policy reverse the resource curse? Evidence from China

Abstract

This study investigates the impact of resource policies on regional resource-growth relation – the resource curse hypothesis – in the case of China. We examine three major resource policies: the energy market price reform, the fiscal reform, and the Western Development Strategy. We take advantage of timing and resource type variations in policy implementations and model a cross-province sample of China over the period from 1990 to 2015 with an instrumental strategy. Evidences show that the market price reform together with the privatization on coal mining rights drive the positive effect of resource on provincial economic growth in China. The Western Development Strategy also strengthens the positive resource–growth relation in western provinces through coal and natural gas developments. Evidences also suggest consistent negative resource effects on growth-related factors such as R&D activities and educational attainments.