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Fall 2012

ISSN 0890-913X

Volume 28, Number 1

Categories: Fall 2012 | Economics

Economic Growth, Economic Freedom, and the Resource Curse

Noel D. Campbell, University of Central Arkansas

Thomas J. Snyder, University of Central Arkansas

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TheJournalofPrivateEnterprise28(1),2012,23–46EconomicGrowth,EconomicFreedom,andtheResourceCurseNoelD.CampbellUniversityofCentralArkansasThomasJ.SnyderUniversityofCentralArkansasAbstractThisstudyexaminestherelationshipbetweenresourceabundance,economicfreedom,andeconomicgrowth.Inacross-sectionalanalysis,wefindthatanabundanceofenergyisonlya“curse”ifitaffectseconomicfreedomandinvestment.Controllingforeconomicfreedomandinvestment,anabundanceofresourcesisnotnegativelyrelatedtogrowthbutrathermayincreaseeconomicgrowth.However,consistentwiththeliterature,wefindanabundanceofnaturalresourceshasanegativeimpactoneconomicfreedomandinvestment,whichleadstoanobservedresourcecurse.JELCodes:O11,O13,O43Keywords:Economicfreedom;Economicgrowth;ResourcecurseI.IntroductionManystudieshavedemonstratedthenegativerelationshipbetweennaturalresourceabundanceandeconomicgrowth.CountrieswithahighratioofnaturalresourceexportstoGDPhaveexperiencedslowgrowth,evenwhencontrollingforothervariablesthatmayaffecteconomicgrowth(SachsandWarner,1997;1999).Countrieswithalargeshareofnaturalcapitalaspartoftheirtotalcapital(physical,human,andnaturalcapital)haveexperiencedaloweconomicgrowthrate(GylfasonandZoega,2006).EvenatthestatelevelintheUnitedStates,thereseemstobearesourcecurse,asthosestatesthathadahighshareoftheiroutputfromtheprimarysectorhadaloweconomicgrowthrate(PapyrakisandGerlagh,2007).Countriesthatexportenergy,orrelylessonimportedenergythanothercountries,haveexperiencedalowgrowthrate(shownlaterinTable1A).Thisstudytestswhetherthis“resourcecurse”occursfromnaturalresources’negativeeffectoneconomicfreedom.23

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Title	Economic Growth, Economic Freedom, and the Resource Curse
Authors/Creators:	Noel D. Campbell, University of Central Arkansas Thomas J. Snyder, University of Central Arkansas
Year:	2012
Volume:	28
Number:	1
Pages:	23 - 46
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Resource curse, Economic Freedom, Economic Growth

Citation:
Campbell, Noel D.; Snyder, Thomas J. / 2012. "Economic Growth, Economic Freedom, and the Resource Curse." The Journal of Private Enterprise, 28(1): 23-46.