I’m highly sympathetic to Eric Meade’s response. My interest in these studies was precisely in how easily this myth spread with just a few anecdotes and some bad econometrics. I think the abundance vs. dependence argument is a great example of why we shouldn’t take data as unambiguous representations of reality. Our bias should be toward skepticism of sweeping empirical claims. And we should give all sorts of empirical methods space to operate precisely because it is so hard to get the facts straight.

The Brunnschweiler-Bulte piece is, by the way, OLS.

Just a couple points that misunderstood what I was saying:

-I’m not claiming there are no ill effects associated with natural resources. I’m saying these studies failed to find evidence that resources systematically effect democracy, growth, or development, and most of the popular studies that do have fundamental flaws.

-It’s also not the case that these studies (or I) claim that there are NO countries that fit the Curse story, but that it’s not the systemic phenomenon other studies had argued for.

But when I look at the oil-rich theocracies ISaudi Arabia, Iran) of the Middle East and compare that to the effect of silver on Iberia, particularly Spain, from the C16th-C18th, there are some strikingly similar patterns: autocracy, de-commercialisation, aggressive religious obscurantism. We forget that medieval Spain was a pioneer of parliamentarism (giving merchants representation via elected delegates was a Spanish, not an English, innovation: the English copied it later). The flood of silver undermined both parliamentarism and what had been a highly commercial society by giving the Crown the financial power to buy off/ignore commercial and other interests that the Dutch and English were forced to incorporate into their political processes. The Crown could also be as religiously obscurantist as they liked: which turned out to be quite a lot–after all, it provided a way of sorting who was “in” and who was “out” (how to be “in”) when it came to handing out the goodies.

For example, what if someone were to use econometrics to study the conditions that best foster the “social learning” that Ellerman talks about, for example, by comparing the pace of economic development in different parts of China, and then trying to draw conclusions that could inform policy. Would this be objectionable?

But the problem with Nigeria is that its political institutions *formed* in the context of natural resource abundance. You can’t use country level fixed effects to account for that, because there wasn’t a country except very briefly before the oil. The approach of the 2nd study in this context- using other West African countries as a baseline- is not very convincing at all (to me anyway). In the context of Nigeria, it’s hard for me to see how any reasonable observer could conclude that oil has not been detrimental to institutional development.

I don’t agree with Eric’s blanket statement that econometrics is not a good tool for thinking about development. Rather, the problem is more that economists abuse econometrics all the time, and unless you’re an economist yourself (and often not even then) you don’t really have any basis to seperate the wheat from the chaff. Eric’s point is very much a valid indictment of the discipline and the way many economists go about things, but let’s not throw the baby out with the bathwater. A good, hard, honest look at the data is the one of the best tools we have for evaluating a lot of aspects of development. I agree that development economists should stop goofing around with fancy methodological tricks and stick to the basics; this to my mind is probably the most persuasive argument in favor of the recent trend toward RCTs.