This paper uses the index published in Economic Freedom of North America (Karabegović and McMahon, 2008) to examine the impact of the relationship between resource dependence and institutional quality on economic development in US states. Studies have shown that resources can indeed crowd out such factors as investment, education, and the economy's efforts at industrialization, a situation now known as Dutch Disease, named after the experience of the Netherlands when the discovery of natural-gas fields led to a decline of the manufacturing sector.