The Resource Curse Revisited

The "resource curse," also called the paradox of plenty, describes the empirical observation that countries richly endowed with natural resources, particularly oil, gas, and minerals, have often experienced slower long-run economic growth, weaker institutions, and a higher incidence of conflict than resource-poor countries with otherwise comparable starting conditions. The concept was named by Richard Auty in 1993 and given its most influential early empirical grounding by economists Jeffrey Sachs and Andrew Warner, whose widely cited 1995 and 2001 studies found a statistically significant negative correlation between natural resource export dependence in 1970 and subsequent GDP growth across a large cross-section of countries through the following decades, a finding that provoked substantial subsequent debate over causation, measurement, and the specific channels involved.