Question 1. Create an overall index of resource reliance by

1. Create an overall index of resource reliance by adding together energy depletion, forest depletion, and mineral depletion (all measured as a percent of national income). Do countries that have higher values for natural resource depletion have above average incomes? Do your calculations provide evidence of a “resource curse”? How do you expect this index would be related to corruption control? Make a scatter plot that shows this relationship. Does it support your idea?

2. How would you expect the overall index you constructed in #1 to be related to investment? Make a scatter plot that shows the relationship between investment rates and this index. Does it support your ideas?

3. How would you expect the overall index you constructed in #1 to be related to the importance of industry in an economy? Make a scatter plot that shows the relationship between this index and the percent of GDP attributed to industry. Does it support your ideas?

4. Using the results from questions one through three above. Discuss possible reasons for the resource curse. Do your graphs provide evidence for any of these ideas? How and why does it differ from the prediction of the Solow Model with Natural Resource as an input (discussed in our last class)?

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