The pungent smell of "red herrings": Subsoil assets, rents, volatility and the resource curse.
Brunnschweiler and Bulte (2008) [1,2] provide cross-country evidence that resource curse is a "red herring" once one corrects for endogeneity of resource exports and allows resource abundance to affect growth. Their results show that resource exports are no longer significant while value of subsoil assets has a significant positive effect on growth. But the World Bank measure of subsoil assets is proportional to current rents, and thus is also endogenous. Furthermore, their results suffer fro...Expand abstract
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