Evidence has shown that the allocation of talented people affects the long-term growth. It has been found that a large population of engineers tends to foster innovation and growth more rapidly than population of lawyers and other activities with access to the public rent. Yet little is known about what determines the allocation of talents. This paper uses a sample of 69 developing countries to address this question. It shows that the oil rent tends to orient talents towards productive activities in well-governed countries, and towards rent seeking activities in poorly governed countries. These results are robust to different specifications, datasets on governance quality and estimation methods. The paper sheds light on the sources and mechanisms of the resource curse through its effect on human resources and rent-seeking activities.
