| Natural resources: gift or trap? On one hand, the endowment of natural resources is expected to boost the locality's industrialization and economy growth by providing substantial supply of energy and materials. On the other hand, countries with huge contribution of natural resources in their economy witness tremendous problems including not only economic underperformance, but also violence, corruption, lack of rule of law, and instability, etc. Aiming to detect the underlying mechanisms, more and more attention has been paid not only to cross-nationaol disparities caused by natural resource endowment, but also to the cross-regional inequalities in terms of governance. My research explores how mineral resources, the key lootable natural resources, have influenced local governance and what the causal mechanisms are in China. During the past decades, China has enjoyed the advantage of its diverse natural resource reserves and a large number of mineral bases that emerged during the process. However, it's hard to ignore the existence of the trap effect on these mineral regions. Through the analysis of original panel data of China's more than 260 prefecture cities from the year of 2001 to 2010, this study confirms the hypothesis that mineral dependence hampers local governance systematically. Based on statistics and also the interviews of author's field study in mining regions of multiple provinces and autonomous regions, my research focuses on two aspects to explain how the negative impact of natural resources occurs under China's economy and political institutions. Firstly, determined by the economic structure, mining areas lack incentive to put human resource development as priority fiscally and administratively, which results in the underperformance of human resource-enhancing public goods in the jurisdiction. Secondly, resource rent from the natural endowment and large-scale SOEs' management of the mineral industry release local governments from the responsibilities of cultivating other taxation base, improving the communication with local residents and public goods provision. Therefore, mining areas suffer from the gift of abundant resources. |
