Section Days abstract book 2010.indd - RUB Research School ...

THE IMPACT OF NATURAL RESOURCE
ABUNDANCE ON INSTITUTIONAL TRANSITION
AND ECONOMIC GROWTH
Elkhan Sadikhzadeh
Institute of Development Research and Development Policy; Ruhr-Universität Bochum,
44801 Bochum, Germany
e-mail: sadikebd@rub.de
There is a broad consensus that the resource curse does not lie in resource richness per se, but
in the combination of inefficient institutions and resource abundance. But there is not enough
empirical evidence which institutions are the primary transmission channels of resource curse
and how they impact other institutions that strengthen or weaken the symptoms of resource
curse.
The theoretical analysis on the basis of a self-developed mathematical model of rent-seeking
shows that an increase of the natural-resource revenues impacts negatively institutional
quality. In the framework of theoretical analysis it has been prooven that a higher level of
diversification of economy and especially a large manufacturing sector alleviates the level of
rent-seeking of a resource abundant economy.
The main finding of the dissertation project is that the structure of the economy before and
during resource-boom and the planing horizon of the government are the pivotal factors in
explaining why natural resource abundance sometimes causes higher long-run economic
growth and sometimes deindustrialization accompanied by relatively low economic growth.
In the next step the findings of the theoretical analysis should be tested empirically with
special attention to the oil and gas-rich post-Soviet republics like Azerbaijan, Kazakhstan,
Turkmenistan and Russia. The majority of the existing studies about the institutional
transmission mechanisms of resource curse are dedicated to the experiences of resource‐rich
African, Latin American and Middle Eastern countries, Norway, Australia and Canada. But
there was no serious attempt to survey the quality and dynamics of institutional change in the
resource abundant post‐Soviet republics. Because of their unique historical and
socio‐economic features it is of a great theoretical interest to understand the impact of
resource‐richness on the institutional transition processes of resource-based post-Soviet
Republics.