The natural resource curse and institutions in post-Soviet countries

We examine the effect of natural resource exports on economic performance during the 1996-2011 period in the 15 independent countries that formerly comprised the Soviet Union. These countries were a largely homogeneous group with respect to social and institutional context; however, these countries began to demonstrate marked differences from one another with respect to these factors during the transition, which has resulted in unique cross-section and time variation. Using several panel regression models that address the endogeneity and clustering issues, our results suggest that natural resources crowd out manufacturing sector unless the quality of domestic institutions is sufficiently high.