Sachs & Warner (2001): The Curse of Natural Resources

Overview

"The Curse of Natural Resources" is a 2001 article by Jeffrey D. Sachs and Andrew M. Warner in the European Economic Review 45(4–6), pp. 827–838.[1] It summarizes and extends the authors' influential 1990s empirical work (the NBER working paper "Natural Resource Abundance and Economic Growth," rev. 1997/1999) documenting a negative cross-country association between natural-resource dependence and economic growth.[1][2] The paper is the standard reference for the "resource curse" and is cited on this wiki's Capturing resource rent works page as the sobering general backdrop against which Norway's success is the exception.

Finding

The headline result: "countries with great natural resource wealth tend nevertheless to grow more slowly than resource-poor countries."[1] In the underlying empirical work this is the finding that economies with a high ratio of natural-resource exports to GDP at the start of the sample grew more slowly over the following two decades (roughly 1970–1990), even after controlling for initial per-capita income, trade openness, and other standard growth determinants — and that the result "is not easily explained by other variables, or by alternative ways to measure resource abundance."[1][2] Sachs and Warner emphasize a price/tradables channel: resource-abundant economies "tended to be high-price economies and, perhaps as a consequence, these countries tended to miss-out on export-led growth" — the "Dutch disease" mechanism.[1]

Relevance

This study bears on the wiki as a conditional challenge to Capturing resource rent works — where institutions are strong. It is not a refutation of that claim, and the claim page states as much: the wiki's position is that capture works where fiscal design and institutions are strong (Norway, Botswana), and curses where they are weak. Sachs and Warner supply the "on average" side of that ledger — the empirical fact that, across countries, holding resource rent has more often coincided with slow growth than with prosperity. It converges with Martinez (2018) at the sub-national level: rent that arrives without institutional discipline erodes governance. Read together they locate the decisive variable in the institutional channel, not in the rent itself.

Limits

• The curse is contested. A prominent line of work argues the correlation reflects institutions, not resources per se: Sala-i-Martin & Subramanian (2003, NBER) find that once institutional quality is controlled, natural resources have little direct negative effect and mostly work through institutions; Mehlum, Moene & Torvik (2006) and others show resource abundance helps growth where institutions are "producer-friendly" and hurts where they are "grabber-friendly." So the paper bears as evidence that the institutional precondition on the wiki's capture claim is real, not that resource rent is inherently a curse.
• Dependence vs. abundance. The measure driving the result is resource exports relative to GDP (dependence), which is partly endogenous to how undiversified an economy is; critics note this is not the same as underlying resource wealth.
• Not about tax design. The paper is about resource-rich economies' growth, not about the georgist question of whether the rent should be captured. It qualifies the outcome of capture in weak-institution settings; it says nothing against high-rate capture where institutions are strong.

See Also

• Capturing resource rent works — where institutions are strong — the claim this paper conditions
• Learning by Failing: The Origins of the Norwegian Oil Fund (Lie) — the institutional exception that escaped the curse
• Natural Resource Rents, Local Taxes, and Government Performance: Colombia (Martinez) — the sub-national analogue
• Acemoglu, Johnson & Robinson: Botswana — a second institutional escape from the curse
• Resource Rents — the underlying concept

Sources

1. Jeffrey D. Sachs & Andrew M. Warner (2001), "The Curse of Natural Resources," European Economic Review 45(4–6), 827–838 — used for the headline finding that resource-rich economies tend to grow more slowly, the "not easily explained by other variables" robustness claim, and the high-price/missed-export-led-growth (Dutch-disease) channel. Title, authors, journal, volume, pages, and year verified against the publisher record and the author's own listing this session; the abstract phrases are quoted from those sources. ScienceDirect · Author copy (Columbia)
2. Jeffrey D. Sachs & Andrew M. Warner, "Natural Resource Abundance and Economic Growth," NBER Working Paper No. 5398 (1995, rev. 1997/1999) — the underlying empirical study the 2001 article summarizes; used for the ~1970–1990 growth window and the specification that controls for initial per-capita income and trade openness. Referenced as the empirical basis; the 2001 EER paper is the primary verified source for the summary findings above.