Department of Economics
University of Delaware
Working Paper #2007-04

Minerals, Openness, Institutions and Growth: An Empirical Analysis

James L. Butkiewicz and Halit Yanikkaya

ABSTRACT

Empirical evidence from a panel-data analysis indicates that a mineral resource curse exists for certain developing countries, but not for developed countries.  Countries with weak institutions are cursed, while developing countries with strong institution are able to avoid the curse.  These results are consistent the hypothesis that owners of mineral resources use weak institutions and openness to trade to stifle the development of human capital, to the detriment of growth of other sectors of the economy.  Imports of manufactured goods substitute for the development of domestic manufacturing, so openness to trade correlates with lower growth in mineral dependent countries.

JEL Classification: Q32, O11, O50

Key Words: Mineral Resources, Institutional Quality, Economics Growth