"Resource Curse" Effect on Economic Growth in Western Region of China

Laggard economic development level coexists with wealthy natural resource endowment in western region of China, which is similar to the symptom of "resource curse". This paper suggests that "resource curse" effect is also applicable to explain the phenomenon at such a province level. Primary empirical analysis presents the possibility of suffering from the "curse" in the region, and then an econometric model and its long-term income effect is developed for testing the hypothesis and analyzing transmission channels through which "resource curse" effect functions. Through the panel data of twelve western provinces, we use feasible general least squares (FGLS) and select energy exploitation as a proxy of natural resource abundance to carry out a detailed empirical study. Econometric results reveal that our hypothesis is true. Abundant energy exploitation is not a favorable factor for economic growth in the long term, and it tends to impede economic growth through some indirect channels.