A curse or a blessing? Natural resources in a multiple growth regimes analysis

Abstract

The literature on the impact of an abundance of natural resources on economic performance remains inconclusive. This paper tests the hypothesis that whether natural resources are a curse or a blessing depends on the growth regime to which economy belongs. We follow recent work that has used a mixture of regression method to identify different growth regimes, and find that in one regime resources are a blessing, while in the other they are a curse or at best have no impact. Our analysis of the determinants of whether a country belongs or not to the blessed resources regime indicates that the level of democracy plays an important role while education has no effect.

Threshold regressions for the resource curse

“…The sample split in Clootens and Kirat (2017) is subjective, and could be improved by the use of formal sample-splitting methods. Konte (2013) argues that the impact of natural resources on growth may depend on the growth regime to which the country belongs. Using regression-mixture methods, she shows that natural resources increase growth in some countries but reduce it in others.…”

Essays on marine resources conservation : macroeconomics and national accounting

“…4 Fernandez et al (2001) show the superiority of BMA over other techniques in selecting regressors to explain cross-country growth. 5 See Owen et al (2007) and Konte (2013) for a summary on how the question of multiple growth regimes has been addressed in numerous works focusing on different theories such as neoclassical, growth regime for the whole sample under conditional convergence or whether there is a growth process with multiple growth regimes in which economies with similar conditions tend to converge to one another (Durlauf and Johnson, 1995). That is, even after controlling for structural heterogeneity there is a role for initial conditions in explaining variation in crosscountry growth behaviour.…”

“…That is, even after controlling for structural heterogeneity there is a role for initial conditions in explaining variation in crosscountry growth behaviour. 6 Konte (2013), for instance, allows for multiple growth regimes and finds that democracy helps a given country to belong to the blessed regimes in terms of natural resources while education has no effect.…”

“…Konte (2013), for instance, allows for multiple growth regimes and finds that democracy helps a given country to belong to the blessed regimes in terms of natural resources while education has no effect.…”

“…163 Further work based on longer time-series and specific country samples, could enable to provide more evidence on the nature of the effect of natural resources on economic growth in the long-run. Our work and that of Konte (2013) testing whether neoclassical and institutional variables help a given country to belong to a certain economic growth regime with specific implications in terms of natural capital, are some first attempts to develop country typologies. One research question would be then how can countries fall under the classifications that enable to benefit from natural capital.…”