Y. Al Jalal, 2018. MSc Thesis, London School of Economics and Political Science
Abstract. - The existence of a resource curse phenomenon has largely been debated among economists and policymakers. This paper seeks to confirm, using a time series analysis, the negative correlation between resource dependence and economic growth. I find that countries, heavily reliant on resource rents, tend to face poor growth rates over the long-run, specifically over a 10-year average. From there, I set out to investigate why these rents are being depleted. I build upon Atkinson and Hamilton (2003) sustainability-oriented approach to investigate government expenditure activities. I find that government consumption only exacerbates the resource curse, whereas expenditure in primary education helps to alleviate the curse over the long-term. Evidence of this association is particularly significant for policymakers, who may use this information to harness macroeconomic and fiscal policies in an effort to productively manage large resource windfalls.