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This paper explores the impact of natural resources on development. It uses new data on natural resources to show that, contrary to the popular ‘resource curse’ hypothesis, resource abundance in itself is not negative for a country’s economy. It argues that whether natural resources are good or bad for a country’s development depends crucially on the interaction between institutional setting and the type of resources that the country possesses.Findings include:some natural resources are for economical and technical reasons more likely to cause problems such as rent-seeking and conflicts than others: these are ‘technically appropriable’ resourcesthis potential problem can be countered by good institutional quality, which renders theses resources less ‘institutionally appropriable’mineral rich countries are cursed only if they have low quality institutions, while the curse is reversed if institutions are good enoughthis trend is even more stark for countries rich in diamonds and precious metalsas resources become less technically appropriable, the relative importance of institutions is predicted to be less decisive.[adapted from author]
