Resource curse, governance and economic growth in Algeria

Abstract EN

Natural resource abundance has traditionally been viewed as a positive factor for economic growth.

According to empirical evidence, resource rich countries specially oil usually have lower rates of growth compared to resource poor countries.

In development economies literature, this paradox is referred to as the « resource curse ».

In this study, we try to test the resource curse hypothesis in Algerian economy applying a VAR model using annual data over the period 1970-2020.

Our results indicate that the negative growth effects of oil price volatility offset the positive impact of oil boom, therefore, we argue that oil price volatility and lower institutions quality, rather than oil abundance per se, drives the resource curse paradox in Algeria.

Therefore, solutions should be diversify the Algerian economy.