with insecure property rights, we analyze how resources are transformed into productive capital to sustain consumption. We … allow property rights to improve as the country transforms natural resources into capital. The ensuing power struggle about … result, the country substitutes away from resources to capital too rapidly and invests more than predicted by the Hartwick …

savings rate yields a much weaker and smaller effect. This suggests that the saving of non-physical capital is influenced more … strongly by institutional quality than that of physical capital. This further supports the explanation of the 'resource curse …