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Abstract
In 1995, Jeffrey Sachs and Andrew Warner found a negative relationship between natural
resources and economic growth, and claimed that natural resources are a curse. Their work has
been widely cited, with many economists now accepting the curse of natural resources as a welldocumented
explanation of poor economic growth in some economies (e.g., Papyrakis and Gerlagh, 2004; Kronenberg, 2004). In this paper, we provide an alternative econometric
framework for evaluating this claim, although we begin with a discussion of possible
explanations for the curse and a critical assessment of the extant theory underlying the curse. Our
approach is to identify natural resources that have the greatest rents and potential for exploitation
through rent-seeking agents. The transmission mechanism that we specify works through the
effect that rent seeking has on corruption and how that, in turn, impacts wellbeing. Our measure
of wellbeing is the Human Development Index, although we find similar results for per capita
GDP. While we find that resource abundance does not directly impact economic development,
we do find that petroleum resources are associated with rent-seeking behavior that negatively
affects wellbeing. Our regression results are robust to various model specifications and
sensitivity analyses.