The resource curse and human capital

Abstract

Having confronted the neo-classical growth model with the data on the Russian regions, we now have to focus on the main issue for the Russian economy – the resource curse. The reason why the blessing with the natural resources may turn into a curse is extremely hard to capture with econometric techniques. Thus, we have to analyze the data on industrial structure and examine different causes of the resource curse. We will try to grasp the consequences of the resource curse in Russia with a special focus on the brain-drain problem. The resource curse is often associated with a lower demand for human capital – we will try to check this using the wage distribution. Afterwards we will model the hazardous impact of the resource curse on human capital with the help of game-theoretic approach. Since human capital proxy was relatively robust in some specification in the OLS growth regressions, we consider the human capital to be one of the most crucial, and yet, very vulnerable (e.g. because of the brain-drain), determinants of growth.