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...on that there are potentially powerful positivesand negative growth consequences to extensive endowments of naturalsresources. Resource-abundant states thus tend to sort into two distinct equilibria (=-=Mehlum, Moene, & Torvik, 2006-=-). In one, natural resources aresadvantageous to economic performance; they provide revenues for publicsgoods provision and institutional improvement and facilitate important linkages to high value-ad...

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...x-post rents, and finally to outright nationalization. The perceived threat of such actions may be an initial impediment to the development of a resource extraction sector. 21 The presence of incentives for governments to expropriate or misallocate natural resource income suggests that the challenges for governments are larger in countries with weak institutions.20 Other recent work also concludes that natural resources may impose costs related to government behaviour, especially in developing countries. For example, abundant natural resources may increase rent seeking (Tornell and Lane 1999; Halvor et al. 2006a, 2006b), patronage and waste (Robinson et al. 2002), or shortened planning horizons due to increased political challenges to power (Caselli 2007). But convincing evidence of a ‘corrupting’ effect of natural resource abundance is difficult to come by. One paper that sheds some light on this issue is the above-mentioned study of Brazilian municipalities (Caselli and Michaels 2009), which uncovers evidence that large oil revenues increase the odds of news and police investigations of alleged criminal activities involving mayors.21 This evidence suggests that oil money might be more easily ‘stea...

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...tion, may alternatively, be through the exchange rate mechanism, as for example in Corden and Neary (1982), Bulte et al. (2005). Some studies have emphasized the negative impact emanating from rent seeking and poor governance, and include Auty (2001), Torvik (2002), Gylfason and Zoega (2006). While there is a whole body of literature that attributes the slow growth of resource abundant economies to the absence of rule of law, property rights on account of institutional decay, etc. Notable among these are Vijayaraghavan and Ward (2001),Murshed (2004), Bulte et al. (2005), (Mehlum et al., 2005; Mehlum et al., 2006a; Mehlum et al., 2006b), (Olsson, 2005; Olsson, 2006), Arezki and Ploeg (2006). Conflict has also been found to be an important factor in resource abundant economies, as for example Easterly and Ross (1997), (Collier and Hoeffler, 1998; Collier and Nicholas, 2002; Collier, 2003), Ross (2002), Mejia (2004), Humphreys (2005), Lindgren (2006). But there is difference of opinion on whether the impact of conflict on growth is positive or negative. Although these are different explanations of the impact of natural resources on growth, there are spillovers and interactions between them. For example,...

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...eking, or knowledge-seeking MNEs. In the economic geography domain a considerable literature exists on natural-resource-rich, high-risk locations (e.g., Collier & Hoeffler, 2005; Garnaut & Ross 1975; =-=Mehlum, Moene, & Torvik, 2006-=-). Mehlum et al. (2006: 1117) synthesized previous research and noted that, on average, resource-rich countries have less-developed institutions and higher levels of locationspecific hassles (includin...

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...on that there are potentially powerful positive and negative growth consequences to extensive endowments of natural resources. Resource-abundant states thus tend to sort into two distinct equilibria (=-=Mehlum, Moene, & Torvik, 2006-=-). In one, natural resources are advantageous to economic performance; they provide revenues for public goods provision and institutional improvement and facilitate important linkages to high value-ad...