The Resource Curse: A Statistical Mirage?

A surprising feature of resource-rich economies is slow growth.  It is often argued that natural-resource production impedes development by creating market or institutional failures.  This paper establishes an alternative explanation -  a slow-growing resource sector.  A declining resource sector is disproportionately reflected in resource-dependent countries.  Additionally, there is little evidence that resource dependence impedes growth in non-resource sectors.  More generally, this paper illustrates the importance of considering industry composition in cross-country growth regressions.