Does Natural Resource Wealth Spoil and Corrupt Governments? A New Test of the Resource Curse Thesis

Countries with rich natural resource endowments suffer from lower economic growth and various other ills. This work tests whether the resource curse also extends to the quality of regulation and the level of corruption. A theoretical framework is developed that informs the specification of interactive random effects models. A cross-national panel data set is used to estimate these models. Due to multicollinearity, only an effect of metals and ores exports on corruption can be discerned. Marginal effects computations show that whether nature corrupts or not crucially depends on a country's institutions. A broad tax base and high levels of education appear to serve as inoculations for countries against the side-effects of mineral wealth