Institutions and the resource curse
- Halvor Mehlum, Karl Moene and Ragnar Torvik
In the article ‘Institutions and the resource curse,’ Mehlum et al. (2006) contend that the key to explaining the paradoxical result - which often associates natural resource richness with lower economic growth - lies in the condition of a countries institutions. They assert that institutional quality is a barrier, restricting natural resources. Such resources should theoretically increase the wealth of nations through higher investment and growth rates, leading ultimately to augmented levels of economic development. The central argument in this article pivots around this critical role of institutions in achieving such effective economic development in countries …show more content…
From this research, they found ores and metals to have the largest statistic relationship with a countries’ growth. Mehlum conducts similar research by separating the pool of resources into both those which are lootable (ores, minerals, etc.) and those which are more difficult to appropriate, including agricultural based resources such as land. The resulting data leads to the conclusion that those countries with weak institutions and easily lootable mineral resources experience less economic growth. Although the author takes into account explanatory variables such as education, ethnic fractionalisation and language fractionalisation, one could argue that as lootable resources are used to provide testimony to the author’s previously established results; external conflicts should be included amongst the explanatory …show more content…
As this paper outlines the importance of having strong institutions to avoid the resource cure and become growth winners, it is clear that a change must occur, stemming from the private sector institutions. Assuming the conclusion of this paper is in fact accurate; such a change would increase GDP in many countries, worldwide and hopefully help to provide a higher standard of living in such countries. Bibliography
Beland, L. and Tiagi, R. (2009). Economic freedom and the "resource curse". Vancouver, B.C.: Fraser Institute.
Kolstad, I. (2007). The resource curse: which institutions matter?. Chr. Michelsen Institute.
Sachs, J. and Warner, A. (1997). Sources of Slow Growth in African Economies. Journal of African Economies, 6(3), pp.335-376.
Snyder, R. (2003). Does lootable wealth breed disorder? A Political Economy of Extraction Framework. Notre Dame: University of Notre Dame Press.
Wizarat, S. (2013). Are Resource Abundant Countries Afflicted By The Resource Curse?. Malaysia: PAK publishing
- Halvor Mehlum, Karl Moene and Ragnar Torvik
In the article ‘Institutions and the resource curse,’ Mehlum et al. (2006) contend that the key to explaining the paradoxical result - which often associates natural resource richness with lower economic growth - lies in the condition of a countries institutions. They assert that institutional quality is a barrier, restricting natural resources. Such resources should theoretically increase the wealth of nations through higher investment and growth rates, leading ultimately to augmented levels of economic development. The central argument in this article pivots around this critical role of institutions in achieving such effective economic development in countries …show more content…
From this research, they found ores and metals to have the largest statistic relationship with a countries’ growth. Mehlum conducts similar research by separating the pool of resources into both those which are lootable (ores, minerals, etc.) and those which are more difficult to appropriate, including agricultural based resources such as land. The resulting data leads to the conclusion that those countries with weak institutions and easily lootable mineral resources experience less economic growth. Although the author takes into account explanatory variables such as education, ethnic fractionalisation and language fractionalisation, one could argue that as lootable resources are used to provide testimony to the author’s previously established results; external conflicts should be included amongst the explanatory …show more content…
As this paper outlines the importance of having strong institutions to avoid the resource cure and become growth winners, it is clear that a change must occur, stemming from the private sector institutions. Assuming the conclusion of this paper is in fact accurate; such a change would increase GDP in many countries, worldwide and hopefully help to provide a higher standard of living in such countries. Bibliography
Beland, L. and Tiagi, R. (2009). Economic freedom and the "resource curse". Vancouver, B.C.: Fraser Institute.
Kolstad, I. (2007). The resource curse: which institutions matter?. Chr. Michelsen Institute.
Sachs, J. and Warner, A. (1997). Sources of Slow Growth in African Economies. Journal of African Economies, 6(3), pp.335-376.
Snyder, R. (2003). Does lootable wealth breed disorder? A Political Economy of Extraction Framework. Notre Dame: University of Notre Dame Press.
Wizarat, S. (2013). Are Resource Abundant Countries Afflicted By The Resource Curse?. Malaysia: PAK publishing