The search for Resource Curse:the relationship between natural resources, trade and corruption
“What causes economic growth and thus prosperity for the people of the world?” is
the introducing question in the Determinants of Economic Growth of Barro (1999).
A lot of research was done on this topic and one hypothesis was that natural resources
in the broader sense increase income and thereby welfare – until the highest growth
rates in the late twentieth century were achieved in resource-poor economies like
the United States, some European and Asian countries. So why do some countries
achieve high growth rates and some not? On this basis various theories emerged,
among which the theory of the Curse of Natural Resources or the Paradox of Plenty.
The surprising ?nding was that economies, abundant in natural resources like crude
oil, gas or coal, tended to grow slower than poorly resource-endowed countries.
Sachs and Warner (1995), using the share of primary exports in GDP/total exports
show that there are negative e?ects but how can a resource per se hamper economic
development? A branch of literature stresses that a resource itself cannot cause the
curse, but the economic and political handling of the endowment. Gylfason (2007)
mentions six factors that have a positive long-run e?ect on economic growth. Among
them are a countrys ability to build up social capital, which means the absence of
corruption or the presence of democracy, freedom and honesty and manufacturing,
based on natural capital. The last form takes into account the ideas of diversi?cation
of labor based on natural capital, so countries that specialize in manufacturing and
services will be able to accumulate more capital in the long run, compared to lowskill-intensive
primary production. Hence, natural capital di?ers from other forms
of capital, and it can be unfavorable to rely excessively on this particular kind of
capital
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