The Curse of Natural Resources in the Transition Economies

T.H. Kronenberg

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

The curse of natural resources is a well-documented phenomenon for developing countries. Economies that are richly endowed with natural resources tend to grow slowly. Among the transition economies of the former ‘eastern bloc’, a similar pattern can be observed. This paper shows that a large part of the variation in growth rates among the transition economies can be attributed to the curse of natural resources. After controlling for numerous other factors, there is still a strong negative correlation between natural resource abundance and economic growth. Among the transition economies the prime reasons for the curse of natural resources were corruption and a neglect of basic education. In order to overcome the curse of natural resources and move to a sustainable path of development, the resource abundant transition countries should fight corruption and ensure that their resource revenues are invested in human capital or the preservation of natural capital.
Original languageEnglish
Pages (from-to)399-426
JournalEconomics of Transition
Volume12
Issue number3
DOIs
Publication statusPublished - 1 Jan 2004

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