2009/07/29 by Frederick van der Ploeg, F. van der Ploeg, S. Poelhekke +1 · 582 citations
Economics, Econometrics and Finance · Engineering · #Biology #Curse #Economics #Financial economics #Landlocked country #Market Dynamics and Volatility #Mining and Resource Management #Monetary economics #Natural Resources and Economic Development #Natural resource #Openness to experience #Resource curse #Volatility (finance)
paper · doi:10.1093/oep/gpp027
published in Oxford Economic Papers 61(4), 727-760 (Oxford University Press)
openalex publication_date 2009/07/29 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/05
We provide cross-country evidence that rejects the traditional interpretation of the natural resource curse. First, growth depends negatively on volatility of unanticipated output growth independent of initial income, investment, human capital, trade openness, natural resource dependence, and population growth. Second, the direct positive effect of resources on growth is swamped by the indirect negative effect through volatility. Third, with well developed financial sectors, the resource curse is less pronounced. Fourth, landlocked countries with ethnic tensions have higher volatility and lower growth. Fifth, restrictions on the current account raise volatility and depress growth whereas capital account restrictions lower volatility and boost growth. Our key message is thus that volatility is a quintessential feature of the resource curse.