Rule of Law, Riches, and Rogues: a New Perspective on the Resource Curse

Abstract: We uncover interpersonal violence (murder, assaults) as a dimension of the resource curse. Relying on a historical natural experiment in the United States, in which mineral discoveries occurred at various stages of governmental territorial expansion, we show that “early” mineral discoveries, which take place before full-fledge rule of law is in place in a county or a state, are associated with higher levels of interpersonal violence, both historically and today. Our results highlight the role of violence for intimidation rather than expropriation. We provide direct evidence that the persistence of this “homicidal resource curse” is partly mediated by the deterioration of the quality of judicial institutions and the capture of state legislatures. Local persistence is also sustained by different cultural attitudes, namely towards the use of interpersonal violence. The specificity of geological exploration in the United States and the robustness of the results to state-specific effects warrant a causal interpretation to the results.