natural resource wealth (section 2.1). We also discuss historical evidence on how natural
resources have led to establishment of property rights and contributed to economic
development (section 2.2). We then discuss some cross-country stylized facts on the effects of
resources on economic and social outcomes (section 2.3). Finally, we discuss saving statistics
to see to what extent natural resource wealth is converted into physical, human and other
wealth (section 2.4). The main point of these stylized facts is to point out the enormous
variety of experiences of resource rich countries and the puzzles that they suggest. We leave
theories for the effects of resources on growth and conflict and the testing thereof to section 3.
2.1. Diverse experiences of illustrative resource rich countries
Accounts of the resource curse are available for many countries (e.g., Gelb, 1988; Karl,
1997ab; Wood, 1999; Auty, 2001b). The most dramatic example is perhaps Nigeria (Bevan et
al., 1999; Sala-i-Martin and Subramanian, 2003). Oil revenues per capita in Nigeria increased
from US$33 in 1965 to US$325 in 2000, but income per capita has stagnated at around
US$1100 in PPP terms since its independence in 1960 putting Nigeria among the 15 poorest
countries in the world. Between 1970 and 2000 the part of the population that has to survive
on less than US$1 per day shot up from 26 to almost 70 percent. In 1970 the top 2 percent had
the same share of income as the bottom 17 percent, but in 2000 the same share as the bottom
55 percent. Clearly, huge oil exports have not benefited the average Nigerian. Although
Nigeria has experienced rapid growth of physical capital at 6.7 percent per year since
independence, it has suffered a declining TFP of 1.2 percent per year. Capacity utilization in
manufacturing hovers around a third. Two thirds of capacity, often owned by the government,
thus goes to waste. Successive military dictatorships have plundered oil wealth and Nigeria is
known for its anecdotes about transfers of large amounts of undisclosed wealth. Oil wealth
has fundamentally altered politics and governance in Nigeria. It is hard to maintain that the
standard Dutch disease story of worsening competitiveness of the non-oil export sector fully
explains its miserable economic performance. Instead, exchange rate policy seemed to be
driven by rent and fiscal imperatives and relative price movements were almost a by-product
of the resource boom (Sala-i-Martin and Subramanian, 2003).
Other oil exporters (Iran, Venezuela, Libya, Iraq, Kuwait, Quatar) experienced
negative growth during the last few decades. OPEC as a whole saw a decline in GNP per
capita while other countries with comparable GNP per capita enjoyed growth. The de-
industrialization and disappointing growth experience of South Africa following the boom in
gold prices can be explained by the appreciation of the real exchange rate in the 1970’s
followed by gradual depreciations together with increased barriers to technological adoption
(Stokke, 2007). The disruption of the ‘air bridge’ from 1994 onwards shifted the production
of coca paste from Peru and Bolivia to Columbia and led to a huge boom in the demand for