This paper conducts empirical analysis, distinguishing between natural resource types, and implies that it is not appropriate to treat them all alike to address low economic growth rates in resource abundant countries. Particularly, we distinguish between fuel and metal resources, the export of the latter being found particularly harmful for the economic growth. In addition, only fuel exports have significant negative effect on quality of the institutions. The empirical results on economic growth are supported by a theoretical model, which shows that a capital intensive non-traded sector supports growth as traded sector labor falls with increase in fuel price. In case
of metals, utilization of the resource in s traded sector as input, rather than exporting for dividends, helps to keep traded sector labor force and if the traded sector is relatively capital intensive it is possible to achieve positive growth rates.
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