The Curse of Natural Resources in the Transition Econonmies of the Former East

The curse of natural resources is a well-documented phenomenon in developing countries. Economies that are richly endowed with natural resources tend to grow slowly. Among the transition economies of the former “Eastern Bloc”, a similar pattern can be observed. This paper shows that a large part of the variation in growth rates among the transition economies can be attributed to the curse of natural resources. After controlling for numerous other factors, there is still a strong negative correlation between natural resource abundance and economic growth. Among the transition economies the prime reason for the curse of natural resource is corruption. Other reasons for the curse of natural resources may be Dutch disease effect and a neglect of education.