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Is Mother Nature a Curse for Social Development?

  • Economics
  • Education


On the question of whether natural resources kill growth, the jury is still out. While waiting for a decision, we provide evidence that Mother Nature is responsible for slowing down social development over and above any effect it might have on income or growth. We define social development by a combination of health and education outcomes. We find that, after controlling for per-capita income and a bunch of other macroeconomic and institutional factors, a higher dependence on (point and diffuse) natural resources causes social underdevelopment. The estimation of a system of equations indicates two possible transmission mechanisms. One operates via income inequality, the other via macroeconomic volatility.

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