Natural Resources, Institutional Quality, and Economic Growth in China

The resource curse has been mainly studied using cross-country samples. In this paper we analyze a cross-province sample from one country: China. We focus on the interplay between resource abundance, institutional quality, and economic growth, using two different measures of resource abundance (a stock: resource reserves; and a flow: resource revenues), and employing various econometric approaches including varying coefficient models. We find that resource abundance has a positive effect on economic growth at the provincial level in China between 1990 and 2008, an effect that depends nonlinearly on institutional quality (1995 confidence in courts). The ‘West China Development Drive’ policy, initiated in 2000, caused substantial changes, which we investigate through a comparative panel-data analysis.

[1]  E. Bulte,et al.  The Resource Curse Revisited and Revised: A Tale of Paradoxes and Red Herrings , 2006 .

[2]  Nathan Nunn,et al.  Relationship Specificity, Incomplete Contracts and the Pattern of Trade , 2007 .

[3]  S. Fan,et al.  Resource Abundance and Regional Development in China , 2007 .

[4]  Li Ping Yang,et al.  Nonparametric smoothing estimates of time-varying coefficient models with longitudinal data , 1998 .

[5]  C. Norman.  Rule of Law and the Resource Curse: Abundance Versus Intensity , 2009 .

[6]  M. Ross.  Timber Booms and Institutional Breakdown in Southeast Asia: Appendix: Chronologies of Events , 2001 .

[7]  P. Collier,et al.  Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum , 2008 .

[8]  Rick van der Ploeg,et al.  The Pungent Smell of 'Red Herrings': Subsoil Assets, Rents, Volatility and the Resource Curse , 2010, SSRN Electronic Journal.

[9]  Stijn Claessens,et al.  Financial Development, Property Rights and Growth , 2002 .

[10]  Elissaios Papyrakis,et al.  Resource-Abundance and Economic Growth in the U.S. , 2004 .

[11]  J. Sachs,et al.  Natural Resource Abundance and Economic Growth , 1995 .

[12]  Jens Weidmann,et al.  Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth , 1999 .

[13]  James A. Robinson,et al.  The Colonial Origins of Comparative Development: An Empirical Investigation , 2000 .

[14]  Elissaios Papyrakis,et al.  Resource abundance and economic growth in the United States , 2007 .

[15]  Jianqing Fan,et al.  Local polynomial modelling and its applications , 1994 .

[16]  Ragnar Torvik,et al.  Institutions and the Resource Curse , 2006 .

[17]  T. Beck,et al.  Legal Institutions and Financial Development , 2003 .

[18]  Jianqing Fan,et al.  Functional-Coefficient Regression Models for Nonlinear Time Series , 2000 .

[19]  Stephen F. Knack,et al.  INSTITUTIONS AND ECONOMIC PERFORMANCE: CROSS‐COUNTRY TESTS USING ALTERNATIVE INSTITUTIONAL MEASURES , 1995 .

[20]  Carlos A. Leite,et al.  Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth , 1999 .

[21]  M. Woolcock,et al.  The Varieties of Resource Experience: Natural Resource Export Structures and the Political Economy of Economic Growth , 2005 .

[22]  Rui Fan,et al.  Resource abundance and economic growth in China , 2012 .

[23]  H. J. Habakkuk,et al.  Second Thoughts on American and British Technology in the Nineteenth Century , 1963 .

[24]  R. Auty.  The political economy of resource-driven growth , 2001 .

[25]  Shuai Shao,et al.  Energy exploitation and economic growth in Western China: An empirical analysis based on the resource curse hypothesis , 2009 .

[26]  M. Shirley,et al.  Handbook of new institutional economics , 2005 .

[27]  E. Bulte,et al.  Resource intensity, institutions, and development , 2005 .

[28]  B. Olken,et al.  Corruption Perceptions vs. Corruption Reality , 2006 .