This paper examines the evidence of a subnational resource curse. Natural resource extraction can have positive effects, generating profits, tax revenue for government, and economic linkages to other sectors. In contrast, extraction can also have negative economic, environmental and social consequences, including changes in local relative prices that might crowd out other productive activities; deforestation; pollution and degradation; and the potential for social dislocation and displacement.

This paper evaluates the evidence for how these effects accrue to the subnational economy and whether government policy can lead to positive development impacts while balancing the challenge of costs borne locally.