Institutional quality, economic development, and natural resource abundance: Towards and interactive model of development

The study of institutions (i.e., "the rules of the game" in a society) has grown from a small fringe subject in the late 1980s to a massive pillar in the current study of International Political Economy. Two thing has become clear during the course of this growth and the involved research it entails: (1) institutional Quality (especially quality of governance and rule of law) has a determinant effect on the GDP development of a given countries economy and (2) institutional quality has a determinant effect on whether a country is either "cursed" or "blessed" with natural resource abundance (i.e., whether they are growth "winners" or "losers" in terms of GDP development. The purpose of this study is to determine whether the presence of abundant natural resources amplifies this determinant effect when controlled for nonresource abundant states, and if so to what extent. The study ultimately finds amplification of the effect of institutional quality on GDP per capita when controlling for natural resource abundance, ultimately suggesting that resource abundance can be either a "blessing" or a "curse" depending on preexisting institutional quality. Secondary findings indicate the existence of a "slippage" effect in institutional quality once natural resources are introduced to a given state's economy.