Natural resources increase the probability of civil war and can also tempt foreign governments to invade which in turn will affect growth. Rent seeking can cause corruption and distort the efficiency of allocation of resources. Third, abundance of natural resource may reduce private and public incentives to accumulate human capital. Fourth, natural resource abundance may fill people with a false sense of security and may lead the government to lose sight of the need for growth-friendly economic management like free trade. Gylfason considers how abundance of natural resources reduces incentives to save and invest and limits economic growth. (Pendergast, Clarke and Kooten, 2011)
Although these studies focus on the fact that natural resources
Although these studies focus on the fact that natural resources