Resource intensity, institutions, and development

We examine the relationship between resource abundance and several indicators of human welfare. Consistent with the existing literature on the relationship between resource abundance and economic growth we find that, given an initial income level, resource-intensive countries tend to suffer lower levels of human development. While we find only weak support for a direct link between resources and welfare, there is an indirect link that operates through institutional quality. There are also significant differences in the effects that resources have on different measures of institutional quality. These results imply that the “resource curse” is a more encompassing phenomenon than previously considered, and that key differences exist between the effects of different resource types on various aspects of governance and human welfare.