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institutions increases in technical appropriability of resources confirming technical
appropriability. The curse is thus not cast in stone.
Bad institutions clearly have an adverse effect on growth. They may also be more
powerful explanations of cross-country variations in income per capita than geography, trade
or economic policies (North, 1990; Hall and Jones, 1999; Acemoglu, et. al., 2001, 2003;
Rodrik, et. al., 2004; Easterly and Levine, 2002), but not everybody agrees fully (Glaeser, et.
al., 2004). Cross-country evidence also suggests a significant negative impact of natural
resources on income per capita after controlling for institutional quality, trade openness and
geography, and the curse seems particularly severe in countries with bad institutions and low
degrees of trade openness (Arezki and van der Ploeg, 2010).7 Moving towards more trade
openness and improving institutional quality may thus turn the curse into a blessing. Cross-
country evidence suggests that resource dependence weakens institutions and thus leads to
worse outcomes for indicators of welfare such as the human development index, availability
of water, nourishment of the population or life expectancy (Bulte, et. al., 2005).
3.4. Natural resource curse stronger in presidential democracies
The average effect of natural resources on growth across a sample of countries is thus not
very informative. Depending on quality of institutions and degree of openness, there are huge
variations. Following Persson and Tabellini (2003) and using a cross-country sample of 90
countries, estimates suggest that the resource curse occurs in presidential, not parliamentary
democracies (Andersen and Aslaksen, 2008). Presidential systems are less accountable and
less representative and thus offer more scope for resource rent extraction. In contrast,
parliamentary systems seem better able at using resource revenues to promote growth. The
nature of the constitutional system is empirically more important than democratic rule itself
for the link between resource dependence and growth. The empirically observed resource
curse seems to be mostly driven by presidential countries and non-democratic regimes.
The adverse effects of resource dependence on growth survive controlling for geography
such as kilometres to closest airport, percentage land in tropics or incidence of malaria (Sachs
and Warner, 2001). Natural resources can permanently boost income and welfare through
higher human capital, and this can offset the direct negative effect of natural resources on the
growth rate (Bravo-Ortega and De Gregorio, 2005).8 This may explain why Norway has fared
better than most resource-dependent Latin-American countries. It is thus important to
6 This variable is instrumented by mortality rates of colonial settlers (cf., Acemoglu et. al., 2001) and
the fraction of the population speaking English and European languages (cf., Hall and Jones, 1999).
7 Gravity equations for bilateral trade flows are used as instruments for international trade (Frankel and
Romer, 1999) and the fraction of the population speaking English and Western European languages as
the first language (Hall and Jones, 1999) and colonial origins and settler mortality (Acemoglu et. al.,
2001) as instrument for institutional quality.