The Resource Curse - A Natural Experiment

Abstract

This paper compares Mauritius and Trinidad and Tobago which have a very similar climate, history, institutional framework, ethnic composition, size, etc., but are different in the natural resources they possess. Trinidad and Tobago has achieved a higher per capita GDP based on its petrodollars, but Mauritius has achieved a more robust and stable growth path and a diversified economy based on an export-oriented economic strategy. Trinidad and Tobago is highly dependent on the world market prices for oil and gas and engages in a smaller variety of economic activities, giving it a worse perspective for its future economic development. It appears that this curse is mainly working through Dutch disease effects.Resource Curse;Dutch Disease;Natural Experiment;Mauritius;Trinidad and Tobago