Working Paper: NBER ID: w9804
Authors: Xavier Sala-i-Martin; Arvind Subramanian
Abstract: Some natural resources -- oil and minerals in particular -- exert a negative and nonlinear impact on growth via their deleterious impact on institutional quality. We show this result to be very robust. The Nigerian experience provides telling confirmation of this aspect of natural resources. Waste and corruption from oil rather than Dutch disease has been responsible for its poor long run economic performance. We propose a solution for addressing this resource curse which involves directly distributing the oil revenues to the public. Even with all the difficulties of corruption and inefficiency that will no doubt plague its actual implementation, our proposal will, at the least, be vastly superior to the status quo. At best, however, it could fundamentally improve the quality of public institutions and, as a result, transform economics and politics in Nigeria.
Keywords: No keywords provided
JEL Codes: O1; O4; O5; O55; O57; Q0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Distributing oil revenues (D33) | Institutional quality (I24) |
| Natural resources (Q30) | Institutional quality (I24) |
| Institutional quality (I24) | Economic growth (O00) |
| Natural resources (Q30) | Economic growth (O00) |
| Natural resources (Q30) | Corruption (D73) |
| Corruption (D73) | Economic growth (O00) |
| Natural resources (Q30) | Rent-seeking behavior (D72) |
| Rent-seeking behavior (D72) | Economic growth (O49) |
| Natural resources (Q30) | Volatility in commodity prices (Q02) |
| Volatility in commodity prices (Q02) | Economic growth (O49) |
| Natural resources (Q30) | Dutch disease (Q33) |
| Dutch disease (Q33) | Economic growth (O49) |