Addressing the Natural Resource Curse: An Illustration From Nigeria

By Arvind Subramanian, Xavier Sala-i-Martin

July 1, 2003

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Arvind Subramanian, and Xavier Sala-i-Martin. Addressing the Natural Resource Curse: An Illustration From Nigeria, (USA: International Monetary Fund, 2003) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Some natural resources-oil and minerals in particular-exert a negative and nonlinear 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 primarily responsible for Nigeria's 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.

Subject: Commodities, Environment, Natural resources, Non-renewable resources, Oil, Oil prices, Oil, gas and mining taxes, Prices, Taxes

Keywords: Corroborating government figures, Dependent variable, Dutch disease, East Asia, Exchange rate, Gas and mining taxes, Growth, Growth performance, Institutions, Natural resource, Natural resource curse, Natural resource variable, Natural resource-ownership, Natural resources, Nigeria, Nigeria dummy, Non-renewable resources, Oil, Oil, Oil prices, Oil resource, Oil revenue, Physical capital, Private sector, Resource export, Status quo, Sub-Saharan Africa, WP

Publication Details

Pages:

47
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/139
Stock No:

WPIEA1392003
ISBN:

9781451856064
ISSN:

1018-5941

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