The “natural resource curse” may be a problem in search of a solution: as policy analysts investigate sustainable development in the context of the globe's closed economic, environmental, and political systems, a 25-year debate stemming from Auty's unconventional "resource curse" theory has left many unanswered questions and challenges.  The Sachs-Warner model and its variations have supported a prevailing “paradox” paradigm, demonstrating an inverse relationship between natural resource abundance and growth/GDP.  In contrast, Brunnschweiler and others have rejected the “paradox” as illusory, finding instead a positive relationship, and tried to explain, among other things, a causal relationship of weak institutions seeking greater resource extraction rather than vice versa.  Van der Ploeg and Poelhekke have refined studies further by correcting issues of endogeneity, omitted variables, and resource reserve measurement, but ultimately find “neither a curse nor a blessing” relationship.  Additionally, qualitative case studies abound, illustrating the results—arguably consequential and not coincidental—of natural resource extraction, including human rights abuse, exacerbation of public health vulnerabilities, environmental degradation, and corruption.

There are limitations from each of these different approaches.  The empirical studies use growth, GDP or GDP/capita, falling short of fully capturing social welfare measures and focusing heavily on endogeneity concerns in assessing dependence on mineral exports in states with weak institutional capacity.  Case studies risk marginalization from their anecdotal nature, may be geographically and temporally confined, and often lack robust analytical applicability.

This study attempts to update and reframe the complex questions posed by the “resource curse”, leaving the delineations of past empirical relationships in place, while performing a new analysis with trending data and a more widely applicable outcome index.  This study begins by addressing the implications for future policy analysis of the “resource curse” by interpreting not only past paradigms and their methods used to describe and demonstrate the problem, but also analyzing how it might be redefined.

As a specific example, this study performs a regression analysis using a recognized U.N. variable, the Human Development Index (“HDI”), a blend of GDP/capita, literacy, and life expectancy, as the dependent variable and recent U.S. Geological Survey data as an independent variable for mineral extraction activity.  The model controls for a number of independent variables, including population, external debt, democratic institutional capacity, a diversified accounting of non-mining labor, and others.  Preliminary results from the model indicate a statistically significant inverse correlation between mineral extraction activity and HDI.  While the model strives for validity in its own right, its findings help pose further questions for understanding the “resource curse” framework through more research.

Finally, this study describes what can be gained by reexamining alternative outcome measures over time, including Daly’s “beyond growth” approach of valuation and Dasgupta’s concerns for discounting and intergenerational equity.  In this sense, a broader policy analysis platform can be built—from cost-benefit analysis to environmental risk to governance to public finance—by improving measurements but also recasting the “resource curse” problem.