Welfare Resource Curse and Blessing? Accounting for Causal Heterogeneity in the Oil‐Welfare Nexus

ABSTRACT Resource rich countries find it particularly challenging to decarbonize their economies, remaining vulnerable to the negative effects of resource dependence, that is, the resource curse Nevertheless, growing evidence of a positive association between oil abundance and welfare suggests this can avoided. These opposite outcomes linked to the same condition indicates causal heterogeneity. This phenomenon is examined here to elucidate the conditions under which oil rents are associated with high and low welfare. Employing qualitative comparative analysis, these set‐relations are studied configurationally across a sample of 41 oil rich countries. Two configurations of conditions associated with each outcome are identified. Each pathway provides support for a different strand of the literature, alluding to different mechanisms at play. Since reliance on oil cannot be immediately avoided, countries should seek to elude the curse and harness the blessing for their sustainable development. The findings underscore the importance of corruption, taxation, democracy, and inequality to achieve that twofold goal.