The political economy of resource-driven growth

In recent decades, resource-poor countries have out-performed resource-abundant ones. A stylised facts model of competitive industrialisation describes the long-run development of a resource-poor country with a political state that is developmental. Only minor change is required to adapt the model to trace the development trajectory of a resource-abundant country with a similar political state. However, most resource-abundant countries engender a political state that is factional or predatory and distorts the economy in the pursuit of rents. A staple trap model describes the development trajectory under these conditions. The model predicts a growth collapse from which recovery is protracted, especially for small economies that lack a niche trade link with a large economy.