The Investigation of Natural Resource Curse with Emphasis on the Role of Human Capital

Some empirical studies show a reverse relationship between natural resource abundance and economic growth. Natural resource abundance affects economic growth through different transmission channels so that the human capital is the most important one. The main purpose of this research is to investigate the relationship between natural resource abundance and economic growth with emphasis on the role of human capital in this relationship. We analyze this relationship in two groups of petroleum exporting countries: A) Major petroleum exporters B) Other petroleum exporters by cross country economic growth during 1970-2004. The panel data approach is used to estimate econometrics model. Also, the required data is divided to seven parts as five years. In this article the study period is limited to 1970-2004, since the required data for the last five years period of 2005-2009 has not published, yet. Findings show that natural resource abundant inversely related with economic growth, while human capital have a negative effect on group A’s economic growth and positive effect on group B’s economic growth. In addition, we extend the usual specifications for economic growth regressions by incorporating an interaction term between human capital and natural resources, showing that low levels of human capital may not outweigh the negative effects of the natural resource abundance on group A’s growth, but the high levels of human capital may offset the negative effects of the natural resource abundance on group B’s growth.