Resource Curse Effect Research Articles

DISCOUNT RATE DISTORTIONS AND THE RESOURCE CURSE

AbstractEmpirical evidence has suggested a “resource curse” exists, in which countries with abundant resources may have higher initial consumption but then grow more slowly. The effect appears to be dependent on a country's political structure. Theoretical models not typically accounted for historical exceptions, or have not shown the effect exists in a dynamic growth setting. We derive the resource curse effect in an optimal growth model augmented with a political process. The economy has a finite nonrenewable resource, and the government planner can choose to over‐extract natural resources relative to the efficient path by distorting the discount rate, but in so doing incurs political costs that depend on the presence of democracy. Government planners in non‐democratic countries usually have more autonomy in policymaking than those in democratic countries; therefore, the political cost is lower for non‐democratic countries. We show that the incentive for the planner to distort the extraction path is larger, the higher is the initial resource endowment. Consistent with empirical evidence, the distortion raises short‐term consumption but lowers the long‐term growth rate, and institutional differences create corner solutions that explain why some resource‐abundant countries avoid the curse. These results are robust to the inclusion of autonomous technological change.

Natural Resource Curse, Total Factor Productivity and Regional Disparity in China: Based on Dynamic Panel Data Model Analysis

There has been the long debate over the relation between natural resource abundance and economic growth. Since the hypothesis of “natural resource curse” advanced by Gelb (1988) and Auty (1994), many scholars have concentrated on the topic, but no agreement has yet been achieved. This paper makes use of panel datasets of China’s 30 provinces from 1998 to 2009, and GMM method of dynamic panel data model, to calculate the Malmquist index of total factor productivity (TFP), test the natural resource curse hypothesis, and estimate the natural resource consumption equation. Firstly, the TFP index shows that China’s high economic growth is less efficient, and interior provinces have large disparities. Moreover, estimation results of capital and labor equations show that, for the whole country, the natural resource sector’s investment and employment promote GDP growth, so no natural resource curse exists in China. But integral three regions show different situation. The eastern region has been constrained by the resource curse effect since 2007, although the middle and west are not troubled by this due to their lower resource consumption. In addition, the natural resource consumption equation indicates that TFP has significantly negative impact on natural resource consumption for the whole country. The three regions’ TFP are all negatively correlated with resource consumption, owing to fast technological progress in resource exploitation and utilization during these years. Based on these findings, the paper reckons that if TFP rise can reduce natural resource consumption remarkably, the country or the region can eliminate the resource curse effect; or else, it has to suffer negative impact of excessive resource reliance. Finally, it makes some policy recommendations.

Energy exploitation and economic growth in Western China: An empirical analysis based on the resource curse hypothesis

Based on resource curse hypothesis, this paper carries out an econometric analysis on the relationship and its transmission mechanism between energy exploitation and economic growth with cross-province panel data over 1991–2006. Results reveal that there is the significantly negative correlation between energy exploitation and economic growth, which indicates since the 1990s, the resource curse effect from energy exploitation has appeared evidently; though, before the implementation of the Western development strategy, energy exploitation acted negatively on opening degree, S&T innovation and human capital input, the effect was yet uncreated. However, after the implementation of the strategy, the effect emerged evidently as a result of the enhanced negative effect of energy exploitation on S&T innovation and human capital input. Moreover, further tests indicate that energy exploitation impeded economic growth mainly through three indirect transmission channels: The crowding-out effect towards human capital input and S&T innovation, and the weakening of institution aroused by rent-seeking and corruption. And among them, human capital input is the strongest transmission factor.