SSRN Electronic Journal · 2003 · 206 citations · 0 references
Social SciencesEconomicsNatural Resource EconomicsDevelopment EconomicsEconomic DevelopmentMacroeconomicsOil EconomicsResource CurseResource DepletionResource Revenue ManagementWaste GenerationDepletion ExternalitiesEconomic DepletionNatural Resource CurseOil Revenue ManagementPublic Finance InstitutionsPublic Investment Institutions
Oil and mineral resources negatively and non‑linearly affect growth by degrading institutional quality. The authors propose directly distributing oil revenues to the public to mitigate the resource curse. Nigeria’s experience confirms that oil‑driven waste and weak institutions have harmed long‑run growth, and the proposed revenue‑distribution plan could substantially improve institutions and boost growth, outperforming the status quo.
Some natural resources—oil and minerals in particular—exert a negative and non-linear impact on growth via their deleterious impact on institutional quality. We show this result to be very robust. The Nigerian experience provides telling confirmation of this aspect of natural resources. Waste and poor institutional quality stemming from oil appear to have been responsible for its poor long-run economic performance. We propose a solution for addressing this resource curse which involves directly distributing the oil revenues to the public. Even with all the difficulties that will, no doubt, plague its actual implementation, our proposal will, at the least, be vastly superior to the status quo. At best, however, it could fundamentally improve the quality of public institutions and, as a result, durably raise long-run growth performance.