Dutch disease, the impacts of commodity price volatility, rent-seeking, rapacious depletion and conflict.

In our case, we find evidence for growth disappointments setting-in prior to production starting and before governments see windfall revenues. Our findings suggest the challenges posed by resource wealth are present and can have detrimental consequences to the economy long before a single barrel of oil is extracted. Further this effect is associated with the way in which government responds to resource discoveries, mediated by the quality of government policies and institutions.

Our contribution is threefold: we present the first empirical evidence - to the best of our knowledge - of a ‘presource curse’ whereby growth disappointments are observed following resource discoveries rather than subsequent to production and revenue windfalls. Second, we present new evidence on the primary importance of institutions and governance in mediating any such presource curse effects. Third, we build on earlier work such as Blanchard and Leigh (2013) to demonstrate how growth forecast errors can be useful to evaluate the divergence between economic performance and official forecasts, and its implications for policy making. Here our findings suggest that this divergence is associated with weaker governance as well as elevated expectations. Elevated expectations themselves may further exacerbate growth disappointments, for example if they drive overly favourable investor perceptions or sovereign credit scores.

# **1.1 Context and literature**

## **The relationship between economic growth and natural resource wealth**

The relationship between economic growth and resource wealth has been subject to extensive study and debate (for recent surveys see Van der Ploeg (2011) & Ross (2015)). Some argue that on average resource wealth creates a curse, causing reduced or even negative growth, with notable examples including Nigeria and Sierra Leone. In contrast, there are countries whose overall economic development was spurred or unhindered by natural resources - ranging across countries such as the UK, USA, Norway, Malaysia, Botswana and Chile.

An emerging consensus agrees that any overall resource curse effect is best understood as mediated by the quality of institutions (Mehlum et al. (2006) & Robinson et al. (2006)). Here it is argued that countries with strong political institutions at the time of discovery are better placed to reap the benefits of resource wealth, in contrast, countries with weak institutions at the time of discovery are more susceptible to the various resource curse mechanisms and are likely to see a reduction in growth compared to various counter-factuals.

What these studies share in common is an examination of the relationship between resource wealth’s contribution to the economy, typically measured via production value, export dependence or government revenue windfalls, and economic performance. Additionally, these studies typically examine the long run growth effects of resource abundance- examining this relationship across decades.

Our approach differs in three key ways: first, we examine the post-discovery effects of _anticipated_ 4