Erwin H. BULTE

The 2009 Erik Kempe Prize has been awarded to Christa N. Brunnschweiler and Erwin H. Bulte for their study
“The Resource Curse Revisited and Revised: A Tale of Paradoxes and Red Herrings”
published in Journal of Environmental Economics and Management 55, 248-264, 2008.

The Nomination Committee, composed by Thomas Aronsson (chair), Anne-Sophie Crépin and Partha Dasgupta, has awarded this paper for the following motivation:
A new literature has evolved that focuses on the so-called resource curse, which means that resource-rich countries tend to grow more slowly than resource-poor countries. The consensus explanation put forward in earlier literature is that resource-abundance may remove incentives to reform and establish well-functioning institutions by provoking fights over resource rents. This paper re-examines the view that abundant resources lead to bad institutions and slow growth, and challenges the results derived in earlier literature. Whereas earlier literature typically approximates resource-abundance by using a measure of resource-dependence (e.g. resource exports relative to GNP), Brunnschweiler and Bulte make a clear distinction between these two concepts and show, in addition, that measures of resource-dependence are typically not exogenous in the context of economic growth. The results show (i) that resource-dependence is determined by resource-abundance, institutional quality and constitutional factors; (ii) that resource-abundance contributes to higher (not lower) growth; and (iii) that resource-dependence does not affect growth once resource-abundance is controlled for and proper econometric methods are used.

The paper contributes significantly to our understanding of an important problem in the area of environmental and resource economics. This is so for at least two reasons; first, it attempts to explain the mechanisms underlying the associations between economic growth, natural capital and resource-dependence in terms of causal relationships; and, second, it uses proper empirical methods to identify these relationships. The paper also provides a strong conclusion of clear practical relevance: countries should not turn their back on resource-wealth in order to increase the economic growth. As a consequence, it both contributes to the academic literature and to insights of importance for public policy.