The negative relation between the natural resource abundance and economic growth is well documented in the literature (Sachs and Warner, 1995, 1997, 1999a,b, Sala-i-Martin, 1997, Doppelhofer et al., 2000). A number of theories were proposed to explain this negative link. The spectrum of issues raised in the literature ranges from the issues of currency appreciation in the era of high resource prices and the subsequent “Dutch disease” effects that deteriorate the development of industrial sector of the economy (Corden and Neary, 1984; Sachs and Warner, 1995) to the political economy problems associated with the numerous non-productive activities of economic agents provoked by the huge natural resource rents that undermine the institutional development of the economy and slow down economic development (Lane and Tornell, 1999; Auty, 2001)

One of the channels that the literature addresses deals with the link between human capital development and natural resource abundance (Leamer et al., 1999; Gylfason 2001). The argument is based on the idea that resource intensive sectors absorb national savings while creating only a few eminently qualified jobs which leads to lower incentive of the society to educate their citizens compare to the societies with lower abundance in natural resources. However, there is very little empirical research on this topic so far. For example, Gylfason (2001) using several proxies for human capital development such as a share of public expenditure on education in GDP, expecting years of schooling for females, gross secondary-school enrolment shows their significant negative bivariate correlation with the share of natural capital in national wealth in a cross section of 86 countries. Since the results of bivariate correlation can hardly be used as a basis for profound policy advice more rigorous empirical analysis of the human capital development explanation for the link between the natural resource richness and economic growth is called for.