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Chile
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Canada
Average
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Sierra Leone
Congo, Dem. Rep.
2
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Main
Institutional Share of primary
resource*
quality** exports in GDP***
Diamonds
Copper
Crude Petrol
Minerals
n.a.
Crude Petrol
Minerals
Diamonds
Copper
0.706
0.668
0.966
0.974
0.638
0.592
0.520
0.406
0.232
0.05
0.15
0.10
0.10
0.12
0.24
0.05
0.09
0.15
*The listing of main resources is based on UNCTAD data on export structure in 1975.
**The measure of institutional quality is a “Property Rights Index” based on data from
Keefer and Knack (2002). The index score for a country is between zero and one where
higher scores mean better institutional quality. See Appendix A for details.
***The share of primary exports in GDP in 1971 is from Sachs and Warner (1995).
Table 1. Relative growth performance in eight resource rich economies
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Bolivia (0.18)
minerals
Peru (0.15) Algeria (0.19)Chile (0.15)
Philippines (0.13) Jamaica (0.14)
Indonesia (0.11)
Kenya (0.18)
E cuador (0.11)
Cameroon (0.18)
P anama (0.10) Colombia (0.09)
Brazil (0.05)
Norway (0.10)
Canada (0.10)
Netherlands (0.15)
Coffee,cocoa,
sugar and timber
0.4
0.7
0.8
Thailand (0.09)
Guatemala(0.11)
El S alvador (0.16) Egypt (0.07) Costa Rica (0.19)
Nicar agua (0.19)
Sri L anka (0.15)
Agricultural Cyprus (0.14)
Mali (0.08)
products
Argentina (0.05)
Uruguay (0.09)
P araguay (0.10) Fish,
Australia (0.10)
Sweden (0.05)
Finland (0.07)
High institutional
quality
Denmark (0.10)
New Z ealand (0.18)
Ireland (0.15)
Meat
Fertile land
Low technical
appropriability
Figure 1. The two dimensions of resource appropriability. (The number adjecent to each country
name is the share of primary exports in GDP in 1971)
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Growth Institutions PrimExp OrMetExp MinProd MidasProd Gdp75
Institutions 0.39*
PrimExp
-0.34*
-0.29*
-0.14
-0.12
0.47*
OrMetExp
MinProd
-0.45*
-0.33*
0.40*
0.42*
MidasProd -0.03
-0.07
-0.02
0.31*
0.30*
Gdp75
-0.17
-0.14
0.19
0.83*
-0.31*
-0.22
Open
0.17
-0.01
0.03
0.08
0.23
0.30*
0.30
Investment 0.55*
-0.11
-0.15
0.73*
-0.31*
-0.31*
0.69*
Open
0.30*
Figures in bold denotes significance at least at the 90 per cent level; * at the 99 per
cent level.
.
Table 3. Correlation matrix for the entire sample
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(1-LS) (2-LS) (3-LS)
Prim OrMet Min
Exp
Exp
Prod
(4-LS) (5-2SLS) (6-2SLS) (7-2SLS) (8-2SLS)
Midas Prim
OrMet Min
Midas
Prod
Exp
Exp
Prod
Prod
Resources -6.39
-25.4* -20.1*
(8.59)
(4.55)
-95.7* -3.34
Institutions 6.76*
4.89*
4.61*
5.56*
Interaction 4.15
49.6*
36.4*
167.3* -1.27
(4.08)
(1.96)
Res*Inst
(6.16)
(1.64)
(27.8)
(8.97)
0.50
(6.01)
(38.5)
Initial GDP -2.21* -2.05* -1.95*
per capita (0.38) (0.33) (0.31)
Openness
12.5
(1.36)
(1.36)
(18.6)
(5.14)
(8.05)
-2.02* -3.09*
(0.29)
(1.04)
(6.91)
12.7
16.0
(8.22)
9.18
(10.5)
(5.97)
42.5
6.27
(28.0)
143.0
(17.2)
-3.15
(46.0)
-3.95*
(1.35)
(1.96)
0.14
Investments 0.09*
0.09*
0.10*
0.09*
(0.03)
(0.04)
(0.04)
(0.05)
(0.04)
R2
N. of obs.
0.65
80
0.68
80
0.70
80
0.74
80
0.72
80
0.66
80
0.80
80
yes
yes
yes
yes
0.44
yes
0.02
yes
0.38
yes
0.69
(0.03)
0.63
80
Joint sign(a) yes
Hausman(b)
(0.25)
(0.03)
(0.25)
(0.03)
(0.30)
0.06
0.15
-2.62
(1.07)
0.28
(0.30)
0.18
-79.4*
(32.0)
0.22
(0.27)
0.47
-19.0*
-3.49
(14.1)
(0.34)
0.13
(0.40)
0.06
(0.27)
0.07
0.05
Figures in bold denotes significance at least at the 90 per cent level; * at the 99 per cent
level. Robust standard errors in parentheses. The dependent variable is growth. All
regressions include a constant term and regional dummies for Latin America and
Subsaharan Africa (not reported). (a): Joint significance denotes whether the coefficient
estimates of resources, institutions and their interaction are jointly significant. All are
significant at the 99 per cent level, except the 2SLS estimates of PrimExp (96 per cent)
and MinProd (98 per cent). (b): Hausman reports the p-values of the regression-based
Hausman test for endogeneity as explained in the text. The hypothesis is that
institutions are endogenous.
Table 4. The main results
9
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5
PrimExp OrMetExp MinProd
worst institutions
average institutions
aver. + one st.dev. institutions
best institutions
-0.946
0.425
1.152
1.629
-0.548
-0.378
-0.288
-0.228
-1.127
0.304
1.062
1.560
MidasProd
-1.425
0.279
1.183
1.776
Table 5. Marginal effects of resources on growth (for different levels of
institutional quality)
I
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CAN
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USA
AUT
GBR
JPN
AUS
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IRL
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HKG
ITA
ESP
PRT
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Institutions
ISR
KOR
CYP BWA
THA
GRC
CRIBRA
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MYS
CHL
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(1-LS) (2-LS) (3-LS) (4-LS) (5-LS) (6-LS) (7-LS) (8-LS)
Prim OrMet Min
Midas Prim OrMet Min Midas
Exp Exp Prod Prod Exp Exp Prod Prod
Resources -3.61 -35.3* -18.0* -87.6* -8.11* -20.4* -22.3* -89.2
(7.05) (7.42) (6.06)
Institutions 9.58* 5.50
5.93*
(3.23) (2.26) (2.18)
Interaction -0.43 71.8* 32.1
Res*Inst
(12.7) (14.3) (13.2)
(28.9) (3.07)
(7.86) (3.68) (74.2)
6.83* 4.32* 3.66* 3.33* 5.14*
(2.06) (1.31)
(1.37) (1.25) (1.35)
153.3* 7.23
36.8
(41.1) (4.97)
39.7* 159.3
(17.7) (7.61) (98.8)
Initial GDP -2.04* -1.87* -1.85* -1.94* -1.80* -1.65* -1.63* -1.86*
per capita (0.41) (0.35) (0.42) (0.35) (0.24) (0.25) (0.25) (0.28)
0.45
0.26
0.23
0.12
0.54
Investments 0.06
0.08
0.09
0.08
(0.04) (0.02)
0.08* 0.08* 0.09* 0.09*
(0.02) (0.02) (0.02)
R2
0.65
N. of obs. 58
Joint sign(a) yes
0.70
58
yes
0.68
58
yes
0.72
58
yes
0.74
73
yes
0.71
74
yes
Openness
(0.36) (0.36) (0.30)
(0.04) (0.04) (0.04)
(0.30) (0.22)
0.27
0.37
0.25
(0.23) (0.22) (0.22)
0.71
74
yes
0.68
75
yes
Figures in bold denotes significance at least at the 90 per cent level; * at the 99
per cent level. Robust standard errors in parentheses. The dependent variable is
growth. All regressions include a constant term and regional dummies for Latin
America and Subsaharan Africa (not reported). Excluded countries are in (5) are
Botswana, Dem. Rep of Congo, Guyana, Haiti, Nicaragua and South Africa; in
(6) Belgium, Botswana, Dem. Rep of Congo, Hong Kong, Haiti and Nicaragua;
in (7) Botswana, Dem. Rep of Congo, Haiti, Nicaragua, Sierra Leone, and
Venezuela; and in (8) Botswana, Dem. Rep of Congo, Haiti, Nicaragua and
Sierra Leone. (a): Joint significance is defined as in Table 4.
Table 6. The main results for developing countries (1)-(4) and when excluding
outliers (5)-(8)
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(1-LS) (2-LS) (3-LS) (4-LS) (5-LS) (6- LS) (7- LS) (8- LS)
Prim OrMet Min
Midas Prim OrMet Min Midas
Exp Exp Prod Prod
Exp Exp
Prod Prod
Resources -6.55 -6.91 -14.2
-404.0* -6.32
(28.9)
(4.93)
Institutions 5.37* 5.50* 5.08*
5.54*
7.24* 5.37* 4.83* 5.61*
629.6
4.79
(5.06) (5.57) (6.56)
(1.55) (1.50) (1.48)
12.6
23.0
(6.71) (14.9) (11.3)
(1.36)
(2.31)
(354.1) (6.95)
-27.1* -21.6* -87.3*
(10.8)
(1.88)
49.2
(24.1)
(4.02)
(1.40)
(29.3)
(1.35)
41.7* 155.0*
(7.49)
(40.6)
Initial GDP -2.07* -2.08* -2.03* -2.10* -2.29* -2.10* -1.98* -2.01
per capita (0.32) (0.32) (0.34) (0.32) (0.44) (0.36) (0.28) (0.26)
0.51
0.30
0.60
Investments 0.08* 0.09* 0.09*
0.09*
0.09* 0.10* 0.11* 0.09*
(0.03)
(0.03)
(0.03)
(0.02)
R2
0.60
N. of obs. 64
Joint sign(a) yes
0.60
64
yes
0.71
58
yes
0.74
58
yes
0.78
58
yes
0.81
58
yes
Openness
0.26
0.30
(0.26) (0.31) (0.27)
(0.03) (0.03) (0.03)
0.58
64
yes
0.59
64
yes
(0.25)
(0.03)
(0.29)
+
+
"0
**
Res*Inst
"
+
"?
Interaction 4.43
+
++
J
*
+"
0.42
(0.33)
0.47
(0.27)
0.37
(0.27)
Figures in bold denotes significance at least at the 90 per cent level; * at the 99
per cent level. Robust standard errors in parentheses. The dependent variable is
growth .All regressions include a constant term and regional dummies (not
reported). (a): Joint significance is defined as in Table 4.
Table 7. The main results when excluding Subsaharan
Africa (1)-(4) and Latin America (5)-(8)
#.
/
*
2
*
*
!" 0
4 5
+
+
/
+ 0
Institutions Polity75 PropRight84 Rlaw84 Exprop84 Repud84
Polity75
0.73*
PropRight84 0.98*
0.73*
Rlaw84
0.93*
0.68*
0.94*
Exprop84
0.92*
0.69*
0.95*
0.87*
Repud84
0.90*
0.69*
0.93*
0.83*
0.93*
Rlaw98
0.89*
0.89*
0.85*
0.83*
0.78*
0.77*
Figures in bold denotes significance at least at the 90 per cent level; * at the
99 per cent level.
Table 8. Correlation matrix for other institutional variables
6
7
"0
+
9 0
4#$$#5 (
+
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+, 5
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8
+
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+ > + 29
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0
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#-
(1-LS) (2-LS) (3-LS) (4-LS)
(5-LS) (6-LS)
Polity75 Prop
RLaw84 Exprop84 Repud84 Rlaw98
Right84
MidasProd -12.9
-102.2* -69.2
(32.2)
(48.9)
-154.2*
-154.8*
7.90
Institutions 0.03
4.27*
0.35
0.36*
0.43*
0.86*
Interaction 4.07*
184.9* 18.1
25.3*
29.3*
31.1*
Initial GDP -1.14*
per capita (0.24)
-1.96* -1.43*
-1.54*
-1.80*
-1.50*
(12.8)
(0.03)
(1.19)
Midas*Inst (1.47)
Openness
(48.6)
(0.30)
0.02
0.14
(32.5)
(0.18)
(57.2)
(0.10)
(9.80)
(0.11)
(4.60)
(0.36)
(6.53)
(0.25)
(0.25)
(0.23)
(0.24)
(0.27)
0.05
-0.02
Investments 0.12*
0.09*
0.09*
0.09*
0.11*
0.10*
R2
0.63
N. of obs. 78
Joint sign(a) yes
0.69
76
yes
0.62
76
yes
0.69
76
yes
0.68
76
yes
0.69
80
yes
(0.02)
0.13
(0.26)
(0.23)
(0.03)
0.19
(0.26)
(9.52)
(0.22)
(4.99)
(0.03)
(0.02)
(0.23)
(0.02)
(0.02)
Figures in bold denotes significance at least at the 90 per cent level; * at the 99
per cent level. Robust standard errors in parentheses. The dependent variable is
growth. All regressions include a constant term and regional dummies for Latin
America and Subsaharan Africa (not reported). (a): Joint significance is defined
as in Table 4.
Table 9. The main results with other institutional measures
,
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7
Algeria
Argentina
Australia
Austria
Bangladesh
Belgium
Bolivia
Botswana
Brazil
Cameroon
Canada
Chile
Colombia
Congo, Dem. Rep*
Congo, Republic of
Costa Rica
Cyprus*
Denmark
Dominican Republic
Ecuador
Egypt
El Salvador
Finland
France
Gambia
Germany
Ghana
Greece
Guatemala
Guyana
Haiti
Honduras
Hong Kong
Iceland
India
Indonesia
Iran
Ireland
Israel
Italy
++
Jamaica
Japan
Jordan
Kenya
Korea, Republic of
Malawi
Malaysia
Mali
Mexico
Netherlands
New Zealand
Nicaragua
Niger
Norway
Pakistan
Panama
Paraguay
Peru
Philippines
Portugal
Senegal
Sierra Leone*
Singapore*
South Africa
Spain
Sri Lanka
Sweden
Switzerland
Syria
Thailand
Togo
Trinidad and Tobago
Tunisia
Turkey
Uganda
United Kingdom
Uruguay
USA
Venezuela
Zambia
* These countries are, due to data availability, measured until 1996.
Table A1. Countries in the sample
%
PrimExp
Share of exports of primary products in GNP in 1971. Source: Sachs
and Warner (1995), where it is labelled SXP.
FuelOrMetExp Value of export of ores, metals and fuels as share of GDP in 1975.
Source: Unctad (1975, 1979)
Value of export of ores and metals as share of GDP in 1975. Source:
OrMetExp
Unctad (1975, 1979)
Share of mineral production (does not include fuels) in GNP in 1971,
MinProd
where "mineral production" is the production value of the 23 highest
valued minerals in the world as of 1973. Source: Sachs and Warner
(1995) where it is labelled SNR.
Value of production of gold, silver, and diamonds as share of GDP,
MidasProd
average 1972 to 1980. Source: Own calculations based on US Bureau of
Mines (various years) and US Geological Survey (1999).
Is derived from the IRIS data originally constructed by Knack and
Institutions
Keefer (1995) based on data from the International Country Risk Guide.
The five Property Right Index components are Quality of the
bureaucracy, Corruption in government, and Rule of law, scoring from
0-6, and Risk of expropriation of private investment, and Repudiation
of contracts by government, scored 0-10. Higher scores mean better
quality, lower corruption and lower risks. By transforming the first
three into ten point scales (as in Keefer and Knack, 2002), the
(unweighted) sum gives an index from 0 to 50, which we rescale into an
index between zero and one. We use the average over the period 1984
to 1998. Source: Keefer and Knack (2002).
Average yearly growth rate (in per cent) between 1975 and 1998.
Growth
Calculated as [ln(rgdpch98)-ln(rgdpch75)* 100/20], where rgdpch is the
PPP-adjusted GDP per capita between 1975 and 1998. Source: Penn
World Table, Mark 6.1.
Real GDP per capita in constant dollars (Chain index) expressed in
Initial GDP
international prices [ln(rgdpch75)]. Source: Penn World Table, Mark
per capita
6.1
Initial schooling Average schooling years in the total population 1975. Source: Barro
and Lee (2000).
Natural logarithm of average openness (openc) 1975 to 1998. Source:
Openness
Penn World Table, Mark 6.1.
Average investment share of real GDP per capita (ki) 1975 to 1998.
Investments
Source: Penn World Table, Mark 6.1.
The absolute value of the latitude of the country, scaled to take values
Latitude
between 0 and 1. Source: La Porta et al. (1998).
Combined Polity Score for 1975 ranging from +10 (strongly
Polity75
democratic) to -10 (strongly autocratic). Source: Marshall and Jaggers
(2000).
Institutions but only for 1984. Source: Keefer and Knack (2002).
PropRight84
Rule of law index in 1984, scoring from 0-6. Source: Keefer and
RLaw84
Knack (2002).
Rule of law index. Source: Kaufmann et al (2002).
RLaw98
Exprop84
Repudate84
Risk of expropriation of private investment in 1984, scored 0-10.
Source: Keefer and Knack (2002).
Repudiation of contracts by government in 1984, scored 0-10. Source:
Keefer and Knack (2002).
Table A2. Definitions and sources of variables
%#
Variable
Growth
PrimExp
OrMetExp
MinProd
MidasProd
Institutions
Initial GDPpc 1975
Openness
Investments
Obs Mean Std Dev
80
80
80
80
80
80
80
80
80
1.533
0.121
0.041
0.058
0.006
0.638
8.332
4.023
16.88
1.965
0.101
0.068
0.097
0.025
0.215
0.980
0.557
7.701
Min
Max
-5.391
0.006
0
0
0
0.232
6.389
2.790
2.380
5.968
0.543
0.357
0.509
0.198
0.995
9.923
5.899
44.23
Table A3. Descriptive statistics for the entire sample
Variable
Growth
PrimExp
OrMetExp
MinProd
MidasProd
Institutions
Initial GDPpc 1975
Openness
Investments
Obs Mean Std Dev
58
58
58
58
58
58
58
58
58
1.341
0.137
0.046
0.074
0.008
0.530
7.881
4.054
14.48
2.241
0.107
0.078
0.109
0.029
0.135
0.749
0.584
7.536
Min
Max
-5.391
0.010
0
0
0
0.232
6.389
2.790
2.233
5.968
0.543
0.357
0.509
0.198
0.872
9.306
5.900
44.24
Table A4. Descriptive statistics for the developing countries
Variable
Polity75
Propright84
Rlaw84
Exprop84
Repudate84
Rlaw98
Obs Mean Std Dev
78
76
76
76
76
80
0.641
0.574
3.237
6.137
6.005
0.230
7.988
0.250
1.789
2.150
2.087
1.013
Min
Max
-10
10
0.189 0.992
1
6
1.8
9.8
1.6
9.8
-2.153 1.996
Table A5. Descriptive statistics for other institutional measures
%%
+F
*
+ ++ *
(1)
(2)
(3)
(4)
(5)
MidasProd -95.7* -99.2* -96.5* -99.8* -133.2*
(27.8) (30.4) (23.5) (22.4)
(28.7)
Institutions 5.56* 4.78* 6.86* 7.18*
-0.73
(1.36) (1.56) (1.25) (1.31)
(0.89)
Interaction 167.3* 173.8* 169.7* 175.0* 221.8*
MidasP*Inst (38.5) (42.5) (32.3) (30.7)
(41.8)
Initial GDP -2.02* -2.16* -1.96* -2.00*
per capita (0.29) (0.32) (0.30) (0.32)
Openness
0.14
0.14
0.39
(0.25) (0.24) (0.28)
Investments 0.09* 0.09*
(0.03) (0.03)
Schooling
0.12
R2
0.70
N. of obs. 80
Joint sign(a) yes
0.71
80
yes
(0.11)
0.66
80
yes
0.65
80
yes
0.49
80
yes
Figures in bold denotes significance at least at the 90 per cent level; at the 99 per cent level.
Robust standard errors in parentheses. The dependent variable is growth. All regressions
include a constant term and regional dummies for Latin America and Subsaharan Africa not
reported). (a): Joint significance is defined as in Table 4.
Table B1. Dropping and adding controls
4 5
( /
+
0
++
*
++
+
.
/
7 +
.
% ?
%.
+F?
J
'Bad' institutions
+
'Good' institutions
Low MinProd
4
4
High MinProd
Growth, %
8
Growth, %
8
2
0
0
-4
-4
0
.2
MinProd
'Bad' institutions
.4
.6
.2
'Good' institutions
.4
.6
Institutions
Low MidasProd
15
.8
1
High MidasProd
10
10
Growth, %
Growth, %
5
5
0
0
-5
-5
0
.05
.1
MidasProd
'Bad' institutions
.15
.2
.2
'Good' institutions
.4
.6
Institutions
Low MidasProd (no zeroes)
4
4
1
High MidasProd (no extremes)
Growth, %
6
Growth, %
6
.8
2
2
0
0
0
'*
.002
.004
.006
MidasProd (no zeroes, no extremes)
?
.008
J
.2
.4
+
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.6
Institutions
.8
1
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*
(1A) (1B) (2A) (2B)
(3A) (3B) (4A) (4B)
Prim Prim OrMet OrMet Min Min Midas Midas
Exp Exp Exp
Exp
Prod Prod Prod Prod
Resources 0.02 0.42* -0.53
0.31*
-0.22 0.35* -2.08 0.27*
0.20 -0.07* 0.12
-0.02
0.16 -0.03* 0.18
-0.00
Interaction -0.01 0.78* 2.22
0.97*
-0.61 0.80* 8.92
1.75*
(0.16) (8.59) (0.26)
Latitude
Res*Lat
(0.11) (1.64) (0.10)
(0.57) (18.6) (1.23)
(0.02)
(0.01)
(0.10)
(0.16) (0.02) (1.21) (0.01)
(0.09) (0.01) (0.08) (0.00)
(0.89) (0.12) (5.05) (0.05)
Initial GDP 0.14* 0.01* 0.14* 0.002 0.15* 0.01* 0.14* -0.00
per capita (0.02) (0.00) (0.02) (0.001) (0.02) (0.00) (0.02) (0.00)
Openness
0.01 0.00
0.02
(0.02) (0.00) (0.02)
Investments 0.01* 0.00
0.00
(0.01)
0.01 0.00
0.01
0.00
(0.02) (0.00) (0.02) (0.00)
0.01* 0.0003 0.01 -0.00 0.01* 0.00
(0.00) (0.00) (0.00)
R2
0.86 0.91 0.85
N. of obs. 80
80
80
Significance of instruments(a)
F(2,71)
2.77 22.8 4.89
P-value
0.07 0.00 0.01
(0.0002) (0.00) (0.00) (0.00) (0.00)
0.97
80
0.86 0.94
80 80
0.85
80
0.99
80
59.9
0.00
1.74 21.3
0.18 0.00
4.46
0.02
637
0.00
Figures in bold denotes significance at least at the 90 per cent level; * at the 99
per cent level. Robust standard errors in parentheses. The dependent variable is
institutions in columns A, and the interaction term of institutions and natural
resources in columns B. All regressions include a constant term and regional
dummies for Latin America and Subsaharan Africa (not reported). (a):
Significance of the instruments reports the joint significance of excluded
instruments.
Table D1. First stage regressions when instrumenting institutions with latitude
%;
+F
0
*(
(1-LS) (2-2SLS) (3-LS)
Main
Instrument:
regression latitude
FuelOrMet -4.76
Exp
(3.86)
Institutions 6.63*
(2.26)
Interaction 8.19
FuelOr*Inst (6.25)
2.04
(21.1)
15.6
(8.29)
0.68
(37.5)
Initial GDP -2.14* -3.57
per capita (0.42) (1.43)
Openness
0.18
(0.31)
Investments 0.09*
R2
N. of obs.
-0.03
(0.63)
0.04
(4-LS)
Developing
Without
countries
controls
-3.59
-12.8*
9.21*
0.85
6.10
22.5*
(4.72)
(3.13)
(7.71)
!
(3.96)
(1.15)
(5.81)
-1.96*
(0.44)
0.15
(0.36)
0.06*
(0.03)
(0.08)
(0.04)
0.60
80
0.68
80
0.63
58
0.39
80
Figures in bold denotes significance at least at the 90 per cent level; * at the 99
per cent level. Robust standard errors in parentheses. The dependent variable is
growth. All regressions include a constant term and regional dummies for Latin
America and Subsaharan Africa (not reported).
Table E1. Regression results for FuelOrMetExp