Natural Resources: How to Measure Them in ‘Resource Curse’ Studies

The hypothesis of a ‘resource curse’ is one of the most engaging puzzles of economic science. Many scientific works are devoted to explaining and testing this phenomenon. However, the results of said attempts are controversial. There are both conclusions that there is negative or positive connection between socio-economic development and natural resources of a country or a region, and the conclusions that claim the lack of statistically significant connection between them. The ambiguous results forced the researches to review the approaches to measuring the resource wealth and pay more attention to how well the indicators used are related to the mechanisms suggested by the theory. On the other hand, the accumulated empirical evidence shows that the influence of natural resources on the economic development is heterogeneous, while its direction and intensity depend on the type of natural resources. Natural resources per se, received or expected income from the economic exploitation of natural resources, influence the stimuli and decisions made by economic agents (including household and enterprises, through politicians and bureaucrats) through multiple channels and mechanisms. That’s why the authors had to choose among available statistical data those indicators that would describe the channel or mechanisms as accurately as possible. For some the availability will be critical. For others – rental income, whether received or expected. At the same time, to identify the effect the used indicator should be exogeneous, not tied to other factors that explain economic development. The researches solve this two-criteria task differently. The present work offers a review and critical analysis of main approaches to measuring natural resources both inter- and intra-nationally