Savings,Growth and the Resource Curse Hypothesis

An important connection between recent attempts to understand the determinants of economic growth and the measurement of sustainability is the finding of a negative and significant relationship between natural resource abundance and economic growth. This is the so-called resource curse hypothesis. Using cross-country regressions, we offer evidence that the curse may itself be a manifestation of the inability of governments to manage large resource revenues sustainably. In particular, these results offer another perspective on the resource curse hypothesis: the countries where growth has lagged are those where the combination of natural resource, macroeconomic and public expenditure policies have led to a low rate of genuine saving (net saving adjusted for resource depletion).