Institutions and the resource curse: New insights from causal machine learning

Abstract

There is a widely held belief that natural resource rents are a blessing if institutions are strong, but a curse if institutions are weak. We use data from 3,800 Sub-Saharan African districts and apply a causal forest estimator to reassess the relationship between institutions and the effects of resource rents. Consistent with this belief, we document that stronger institutions increase the positive effect of the presence of mining activities on economic development and dampen the negative effect of mining activities on conflict. In contrast, we find that the effects of higher world mineral prices on economic development and conflict in mining districts are non-linear and vary little in institutional quality.