The resource curse hypothesis: an empirical investigation

Abstract: The relationship between natural resources and economic growth has been widely analyzed in the recent past. This thesis empirically examines the “resource curse hypothesis”, i.e. countries with large natural resource endowments have tended to grow less rapidly than resource-scarce nations. In this paper, oil and gas production data are used as a measure for resource abundance. In addition, we will illustrate the importance of institutional quality to mitigate the negative effects of the resource curse. The panel includes data from 58 countries spanning from 1984 to 2014. The linkage between natural resources and GDP growth will be examined using an ARDL and a CS-ARDL model. The results contradict the curse hypothesis: natural resources have a positive impact on economic growth. Therefore, this thesis challenges the past literature regarding the impact of natural resources on GDP growth.