Rethinking the “resource curse”: New evidence from nighttime light data

Abstract

Natural resource are one of the most critical parts of an economy. The “resource curse” hypothesis has long existed in academic circles for economic, social, political, and institutional reasons. This is that large resource endowments have a negative effect on the sustainable development of regional economies. This article argues that there is heterogeneity in the impact of natural resource utilization on economic development, which is highly dependent on the scale of the study, the stage of economic growth, and institutional quality. We examine the “resource curse” hypothesis from a new perspective by combining mineral location data with nighttime light data at the county scale. Nighttime lighting data improves the accuracy of identifying economic activities of natural resources and solves the problem of the lack of micro-scale data. We use a panel dataset containing 80 counties in Guangxi Province, China, from 2008 to 2017. The results show that natural resource utilization has a significant positive effect on the county economy, and there is no substantial evidence of a “resource curse” in Guangxi's county economy. We argue that natural resource endowments can provide the initial capital accumulation for these impoverished regions. We propose that improving institutional quality will improve the sustainability of mining-led development.