The resource curse and social development: Exploring its relation in Latin America

Abstract

For many decades, scholars have debated the relationship between riches in natural resources and development. The aim of this thesis is to complement that debate, by investigating the relationship between riches from natural resource and social development in Latin America, with a specific focus on how quality of governance influences this relationship. In addition, I investigate if the production of different types of natural resources can effect social development differently. Using fixed effects models with country level data on Latin American countries from 1991 to 2012, I find no evidence of a positive, or negative, relationship between riches in natural resources and social development. The null result holds even when economic development (GDP per capita) is used as the dependent variable instead of social development (HDI). Another surprising finding is that the quality of governance does not have an effect on social development, and in turn does not condition the effect of natural resources on social development. I get the same “null findings” when I use production data on different types of natural resources. However, my results indicate that Governance has a positive effect on economic development (GDP per capita), but not on social development in Latin America. My results remain stable when running extensive models, using lagged variables and when excluding influential values from the regression. In short, my results give no support for a resource curse in Latin America.