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Does the “resource curse” hold for growth in genuine income as well?

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Existing studies analyzing the so-called ‘resource curse’ hypothesis regress growth in gross domestic product (GDP) on some measure of resource-intensity. This is problematic as GDP counts natural and other capital depreciation as income. Deducting depreciation from GDP to arrive at genuine income, we test whether the ‘curse’ still holds true. We find supporting evidence, but the growth disadvantage of resource-intensive economies is slightly weaker in terms of genuine income than GDP. We suggest that this provides additional, but somewhat weak and limited, evidence in support of those who argue that the ‘curse’ is partly due to unsustainable over-consumption.

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en

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application/pdf

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http://eprints.lse.ac.uk/626/1/World_Dev_%28resource_curse%29.pdf

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