This paper studies the resource curse phenomenon in China. The “resource curse†is an important claim that the resource-abundant economies grow at a slower pace than the resource-scarce economies do. There are many recent studies that analyze the resource curse phenomenon theoretically and empirically. However, few papers analyze which socio-economic variables determine the resource curse. This paper is di erent from the previous studies in three aspects: (i) The city-level data is used; (ii) Using the functional coecient regression model we can take care of city-specific heterogeneity and, at the same time, analyze the transmission mechanism of the curse of recourses; (iii)We construct a variable to estimate the e ect of the di usion processes of the natural resources among cities in the same province. Our empirical results show that there is no evidence to support the statement of resource curse in China. On the other hand, the level of natural resources in a city imposes a significant positive di usion e ect on the economic growth of neighbor city within the same province.
