Subnational Resource Curse: Do Economic or Political Institutions Matter?

The absence or the presence of the resource curse is often explained by the specifics of politicaland institutional factors. The aim of this paper is to study this effect looking separately ateconomic and political institutions and at their interaction. Unlike most empirical papers inthe literature, this paper considers the intra-national variation of institutional environment andaccess to political decision-making, using a dataset of the Russian regions. It shows that subnationalvariation of the quality of institutions indeed matters for the effects of resources.Economic institutions follow the traditional “resource curse” results: resources have a negativeimpact on growth if the quality of institutions is low. On the other hand, increasing levelof democracy has negative consequences for regions with substantial resources. Finally, thispaper studies the differentiation between the resource-extracting regions and regions, exporting,but not extracting resources, in terms of the conditional resource curse.