Working Paper: Institutions and the Resource Curse within the United States
I investigate the “resource curse” hypothesis in the context of a single country (the United States), focusing in particular on the role of institutional differences across states in mitigating or amplifying the resource curse. I build on the work of Papyrakis and Gerlagh (2007) by explicitly considering the interaction between a state’s natural resource wealth and its institutional quality as measured by per capita corruption convictions. I find that natural resource wealth is associated with lower economic growth only in relatively corrupt states. In states with relatively little corruption, natural resource wealth is actually associated with higher economic growth. These results suggest that the institutional aspect of the resource curse hypothesis is relevant even in a developed country context.