Working Paper: CEPR ID: DP7229
Authors: Mohammad Amin; Simeon Djankov
Abstract: We use a sample of 133 countries to investigate the link between the abundance of natural resources and micro-economic reforms. Previous studies suggest that natural resource abundance gives rise to governments that are less accountable to the public, states that are oligarchic, and that it leads to the erosion of social capital. These factors are likely to hamper economic reforms. We test this hypothesis using data on microeconomic reforms from the World Bank?s Doing Business database. The results provide a robust support for the "resource curse" view: a move from the 75th percentile to the 25th percentile on resource abundance equals 10.9 percentage points more reform, a large effect given that the mean probability of reform in the sample is 57.1%.
Keywords: natural resources; reform; regulation
JEL Codes: K2; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Natural resource abundance (Q33) | lower accountability of governments (H10) |
| lower accountability of governments (H10) | oligarchic states (P16) |
| oligarchic states (P16) | lower likelihood of implementing microeconomic reforms (E69) |
| Natural resource abundance (Q33) | lower likelihood of implementing microeconomic reforms (E69) |
| Decrease in resource abundance (from 75th to 25th percentile) (Q31) | increase in probability of reform (D78) |