racism xenophobia and redistribution we model political competition as a contest between parties that represent constituents and which announce policies in a two dimensional policy space the first dimension concerns the degree of redistribution and the second the race or immigration issue given the distribution of voter preferences on this space a political equilibrium is determined we study the effect that racist or anti immigrant preferences in the polity have on equilibrium values of the redistributive policy for the united states there is a substantial reduction in distribution below what it counterfactually would have been absent racism for the uk france and denmark there are effects of the same sign but with different magnitudes jel d70 d72 d30

war and natural resource exploitation abstract we build a theoretical framework that allows for endogenous conflict behaviour i e fighting efforts and for endogenous natural resource exploitation i e speed ownership and investments while depletion is spread in a balanced hotelling fashion during peace the presence of conflict creates incentives for rapacious extraction as this lowers the stakes of future contest this voracious extraction depresses total oil revenue especially if world oil demand is relatively elastic and the government s weapon advantage is weak some of these political distortions can be overcome by bribing rebels or by government investment in weapons the shadow of conflict can also make less efficient nationalized oil extraction more attractive than private extraction as insecure property rights create a holdup problem for the private firm and lead to a lower license fee furthermore the government fights less intensely than the rebels under private exploitation which leads to more government turnover without credible commitment to future fighting efforts private oil depletion is only lucrative if the government s non oil office rents are large and weaponry powerful which guarantees the government a stronger grip on office and makes the holdup problem less severe

natural resources curse or blessing are natural resources a curse or a blessing the empirical evidence suggests that either outcome is possible this paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources these include that a resource bonanza induces appreciation of the real exchange rate deindustrialization and bad growth prospects and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law corruption presidential democracies and underdeveloped financial systems another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad induces corruption especially in nondemocratic countries and keeps in place bad policies finally resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets the survey also offers some welfare based fiscal rules for harnessing resource windfalls in developed and developing economies

understanding long run african growth colonial institutions or colonial education abstract long term growth in developing countries has been explained in four frameworks extractive colonial institutions acemoglu et al 2001 colonial legal origin la porta et al 2004 geography gallup et al 1998 and colonial human capital glaeser et al 2004 in this paper we test the colonial human capital explanation for sub saharan africa controlling for legal origin and geography utilising data on colonial era education we find that instrumented human capital explains long term growth better and shows greater stability over time than instrumented measures for extractive institutions we suggest that the impact of the disease environment on african long term growth runs through a human capital channel rather than an extractive institutions channel the effect of education is robust to including variables capturing legal origin and geography which have additional explanatory power

the geographical dimension of the development effects of natural resources we study the contribution of natural resource intensity to long term development along different dimensions per capita income institutional quality and education we allow natural resources to affect these dimensions differently in different regions of the world the evidence suggests that natural resources are generally a positive driver of development but in sub saharan africa ssa their contribution is almost negligible if not even negative we explain these cross regional differences with the fact that in ssa more than anywhere else large resource endowments are combined with a particularly bad disease environment some historical evidence and formal econometric results support this hypothesis

the resource curse revisited governance and natural resources the paper analyzes the impact of natural resource abundance on selected governance indicators we use a panel data set with observations on a large number of countries over an extended period of time and employ an instrumental variable technique to account for endogeneity the results show that exports of natural resources have above all led to an increase in corruption this result is robust to both different model specifications and an alternative indicator for natural resource abundance for other governance indicators such as law and order and bureaucratic quality we either find no results or results that lack robustness

government revenues and economic growth in weakly institutionalised states the lack of sustained growth in poor countries has often been attributed to fiscal weakness empirical evidence suggests that governments often fail to provide crucial public goods i argue that this failure may be the result of a political instability effect more resources fuel power struggles among competing elites and decrease the incumbent regime s time horizon in office but with a shorter time horizon it is less attractive to finance growth promoting institutions whose returns only accrue in the future the model further predicts the instability effect to be stronger in countries with little capital or in remote places which render technology adoption expensive

boom bust cycle asymmetrical fiscal response and the dutch disease this paper investigates the changes in expenditure policy in oil exporting countries during boom bust in commodity price cycles and their implications for real exchange rate movements to do so we introduce a dutch disease model with downward rigidities in government spending to revenue shocks this model leads to a decoupling between real exchange rate and commodity export price movement during busts we test our model s theoretical predictions and underlying assumptions using panel data for 32 oil exporting countries over the period 1992 to 2009 results are threefold first we find that changes in current spending have a stronger impact on real exchange rate compared to capital spending second we find that current spending is downwardly sticky but increases in boom time and conversely for capital spending third we find limited evidence that fiscal rules have helped reduce the degree of responsiveness of current spending during booms in contrast we find evidence that fiscal rules are associated with a significant reduction in capital expenditure during busts while responsiveness to booms is more muted this raises concerns on potential adverse consequences of this asymmetry on economic performance in oil exporting countries

the institutional and psychological foundations of natural resource policies abstractthe pressures of political interests which drive the resource curse are well understood but ordinary citizens are usually cast both as the innocent victims of this process and as the potential solution if only governments could be made more accountable to them this paper draws upon recent developments in social psychology to discuss the formation of mass opinions on two aspects of resource ownership one is the spatial assignment of ownership between local and national claims which has been a significant cause of conflict the other is the assignment of revenues between current consumption and future investment which has usually been excessively biased towards the former i suggest why in the absence of an active government communications policy to offset them known psychological biases may interact with resource discoveries to generate mass opinions which contribute to these problems

the resource curse analysis of the applicability to the large scale export of electricity from renewable resources abstract the resource curse has been analyzed extensively in the context of non renewable resources such as oil and gas more recently commentators have expressed concerns that also renewable electricity exports can have adverse economic impacts on exporting countries my paper analyzes to what extent the resource curse applies in the case of large scale renewable electricity exports i develop a comprehensive model that integrates previous works and provides a consolidated view of how non renewable resource abundance impacts economic growth deploying this model i analyze through case studies on laos mongolia and the mena region to what extent exporters of renewable electricity run into the danger of the resource curse i find that renewable electricity exports avoid some disadvantages of non renewable resource exports including i shocks after resource depletion ii macroeconomic fluctuations and iii competition for a fixed amount of resources nevertheless renewable electricity exports bear some of the same risks as conventional resource exports including i crowding out of the manufacturing sector ii incentives for corruption and iii reduced government accountability i conclude with recommendations for managing such risks

geopolitics and international organizations an empirical study on imf facilities there is growing awareness that the distribution of imf facilities may not be influenced only by the economic needs of borrowers this paper focuses on the fact that the imf may favour geopolitically important countries in the distribution of imf loans differentiating between concessional and non concessional facilities to carry out the empirical analysis we construct a new database that compiles a wide array of proxies for geopolitical importance for 107 imf countries over 1990 2003 focusing on emerging and developing economies we use a factor analysis to capture the common underlying characteristic of countries geopolitical importance as well as a potential analysis since we also want to account for the geographical situation of the loan recipients while controlling for economic and political determinants our results show that geopolitical factors influence notably lending decisions when loans are non concessional whereas results are less robust and in opposite direction for concessional loans this study provides empirical support to the view that geopolitical considerations are an important factor in shaping imf lending decisions potentially affecting the institution s effectiveness and credibility

export diversification through resource based industrialization the case of natural gas for small resource rich developing economies specialization in raw exports is usually considered to be detrimental to growth and resource based industrialization rbi is often advocated to promote export diversification this paper develops a new methodology to assess the performance of these rbi policies we first formulate an adapted mean variance portfolio model that explicitly takes into consideration i a technology based representation of the set of feasible export combinations and ii the cost structure of the resource processing industries second we provide a computationally tractable reformulation of the resulting mixed integer nonlinear optimization problem finally we present an application to the case of natural gas comparing current and efficient export oriented industrialization strategies of nine gas rich developing countries

natural resources and economic development new panel evidence the question as to whether natural resources are a curse on economic growth and development is subject to considerable debates and remains controversial using heterogeneous panel cointegration techniques this paper provides a fresh re examination of the resource curse while allowing for cross section heterogeneity and commonalities in the nexus between natural resource abundance and economic development it finds in a sample of developing countries that economies endowed with abundant natural resources tend to develop more slowly than countries with scarce resources natural resources are on average a curse however there is considerable heterogeneity in the effects of resource abundance on economic development across countries perhaps because of differences in the extent of government intervention access to sound money legal structures and the security of property rights the degree of globalization and or corruption

the curse of being landlocked institutions rather than trade this article revisits the long term economic effects of being landlocked the conventional wisdom which also prevails in policy circles is that landlockedness hurts development by reducing trade gravity models of bilateral trade seem to confirm this view however there is no evidence in cross country data of a systematic relationship between landlockedness and country s trade to gdp ratio drawing on this stylised fact the paper explores the possibility that landlockedness might affect gdp independently from its effect on trade theoretical considerations suggest that institutional quality could be a relevant transmission mechanism the estimation of a system of three equations confirms that landlockedness has a negative effect on gdp and that this negative effect is transmitted through institutions rather than trade moreover after controlling for the transmission via institutions and trade landlockedness has a further negative effect on gdp these findings call for a review of the policy approach to the development of landlocked countries

from rent seeking to human capital a model where resource shocks cause transitions from stagnation to growth we present a growth model where agents divide time between rent seeking in the form of resource competition and working in a human capital sector the latter is interpreted as trade or manufacturing rent seeking exerts negative externalities on the productivity of human capital adding shocks in the form of fluctuations in the size of the contested resource the model can replicate a long phase with stagnant incomes and high levels of rent seeking interrupted by small failed growth spurts eventually followed by a permanent transition to a sustained growth path where rent seeking vanishes in the limit the model also generates a rise and fall of the so called natural resource curse before the takeoff an increase in the size of the contested resource has a positive effect on incomes shortly after the takeoff the effect is negative and on the balanced growth path the growth rate of per capita income is independent of resource shocks les auteurs presentent un modele de croissance ou les agents divisent leur temps entre la chasse aux rentes sous la forme de concurrence pour la ressource existante et le travail productif dans le secteur du capital humain cette derniere activite peut se faire dans le commerce ou le secteur manufacturier la chasse aux rentes a des effets externes negatifs sur la productivite du capital humain si l on injecte des chocs prenant la forme de fluctuations dans la taille de la ressource contestee le modele peut generer une longue periode durant laquelle les revenus stagnent et le niveau de chasse aux rentes est eleve periode interrompue par des petits sursauts de croissance qui tournent court et suivie eventuellement par une transition permanente a un sentier de croissance soutenue ou a la limite les activites de chasse aux rentes disparaissent le modele genere aussi l apparition et la disparition de la malediction des ressources naturelles avant que la croissance prenne son envol un accroissement de la taille de la ressource contestee a un effet positif sur les revenus peu apres le decollage l effet est negatif et sur le sentier de croissance equilibree le taux de croissance des revenus per capita est independant des chocs sur la ressource

an empirical analysis of a regional dutch disease the case of canada while there has been extensive research on the dutch disease dd very little attention if any has been devoted to the regional mechanisms through which it may manifest itself this is the first empirical attempt to research a regional dd by looking at the local and spatial impacts of resource windfalls across canadian provinces and territories we construct a new panel dataset to examine separately the key dd channels namely the spending effect and the resource movement effect our analysis reveals that the standard dd mechanisms are also relevant at the regional level specifically we find that a resource windfalls are associated with higher inflation and a labour capital shift from to non primary tradable sectors b resource windfalls in neighbouring regions are associated with a capital labour shift from to non primary tradable sectors in the source region c the spatial dd explains 51 20 of the adverse effects of resource windfalls in neighbouring regions on region specific non mineral international exports in the source region and does not significantly affect domestic ones

natural resources and small island economies mauritius and trinidad and tobago historically small economies especially resource rich ones underperformed on average relative to their larger counterparts small island economies appear still more disadvantaged due to remoteness from both markets and agglomeration economies yet a comparison of two small island economies with similar initial conditions other than their mineral endowment suggests that policy outweighs size isolation and resource endowment in determining economic performance resource poor mauritius adopted an unfashionable policy of export manufacturing that systematically eliminated surplus labour which drove economic diversification that sustained rapid gdp growth and political maturation like most resource rich economies trinidad and tobago pursued policies that absorbed rent too rapidly which impeded diversification and created an illusory prosperity vulnerable to collapse

resource curse or not a question of appropriability this thesis presents three self contained essays focusing on empirical questions in growth and development economics each article addresses specific questions on why countries perform differently in particular i analyse the effect of democracy on economic development the relationship between natural resources and growth and the efficiency of foreign development assistance in the first essay democracy consolidation and growth i analyse the effect of democracy on economic growth in this context i argue that an important aspect to consider is how consolidated political systems are put simply i find that it is not only a question of how democratic countries are but also how long they have been democratic in other words economic performance tends to improve with the duration of uninterrupted democracy the performance of autocracies on the other hand tends to deteriorate over time however for newly established political systems there seems to be a cost of being democratic this implies that democracies only bear their fruit after some time the analysis has important policy implications to overcome initial straits international assistance focused on democratic consolidation may be important and a very good investment in fostering long run development the second essay resource curse or not a question of appropriability together with anne boschini and jesper roine is concerned with the relation between natural resources and economic development for most laymen as well as for most economists it would seem reasonable that countries richly endowed in natural resources also benefit from this wealth however a large literature has found a systematic negative effect of natural resource abundance on economic growth we suggest that this so called resource curse is not determined by resource endowments alone but rather by the interaction between the type of resources a country possesses and the quality of institutions in the country this combination of factors determines what we call the appropriability of a resource the concept of appropriability captures the likelihood of natural resources leading to rentseeking corruption or conflicts which in turn will harm economic development our results suggest that if institutions are good enough the curse may be turned into a blessing this may explain why some countries such as norway and botswana tend to benefit from their resources while others such as angola and sierra leone do not the third and final essay of this thesis foreign sectoral aid fungibility growth and poverty reduction is a contribution to the aid efficiency literature which is concerned with the question of whether aid helps or hinders economic development foreign development assistance is often targeted on specific public expenditure sectors if this aid is not used in the sector for which it was granted e g health education it is said to be fungible and donors may end up financing something completely different from what they intended e g military expenditures the major concern about sectoral fungibility is that the alternative use of aid may be less productive or less socially useful however measuring fungibility is not sufficient to determine whether foreign sectoral aid fungibility is actually harmful what is important is how the funds treated as fungible are used the essay starts by obtaining estimates of fungibility for 57 countries the results suggest that sectoral aid is indeed largely treated as fungible by recipient countries next to assess the economic and health effects of fungibility these estimates are incorporated into an empirical model of aid and growth as well as into a model of aid and infant mortality altogether i find no evidence of more fungible sectoral aid leading to worse performance

do natural resource revenues hinder financial development the role of political institutions we hypothesize that natural resource revenues may deteriorate contract enforcement if political institutions are weak as poor contract enforcement leads to low financial development resource revenues may hinder financial development in countries with poor political institutions but not in countries with comparatively better political institutions we provide empirical support for this hypothesis based on within country variation in our sample covering the period 1970 2005 and 133 countries our results are robust to the use of additional control variables different samples and alternative measures of financial development and political institutions

resource shocks and human capital stocks brain drain or brain gain abstract based on the paradox of plenty resource abundant countries tend to be vulnerable for lower economic prosperity along with instable political institutions as well as corruption this paper sheds light on the relationship between resource abundance and the selectivity of migration first i combine a dutch disease model with a roy borjas model in order to elaborate on the relationship between resource shocks and migrant selectivity theoretically thereby i predict that resource booms give rise to brain drain effects which are mediated through distributional effects under certain conditions second i provide empirical evidence for the effect of resource shocks on migrant selectivity based on a structural equation model in order to disentangle effects on income inequality and migrant selectivity the results show that resource shocks especially oil booms strengthen brain drain effects in a sample with 116 source and 23 destination countries between 1910 and 2009

the effects of natural resources on urbanization concentration and living standards in africa summary this paper examines the effects of natural resource abundance on urbanization and living standards in africa our central hypothesis is that the exploitation of natural resources in a context of poor governance quality creates the conditions for rapid urbanization and urban concentration and ultimately lowers living standards in primal cities using a large panel of african countries our results show that an increase in the share of natural resources leads to a rapid increase in urbanization and urban concentration even after taking into account endogeneity issues or after using more exogenous measures of resource dependency the paper also establishes a negative association between the resource abundance the quality of life in large cities and the degree of informality via the increase in urbanization rate and urban concentration importantly we have established that these results mostly hold in the context of bad governance more specifically the resource led urbanization and concentration booms take place mainly in countries characterized by poor governance records furthermore poor governance quality is associated with a more detrimental effect of urbanization and urban concentration on the quality of life in african cities these results suggest that ongoing transformations experienced by these countries call for complementary policies to ensure a more balanced and efficient urbanization process

natural resources and the quality of economic development abstract are natural resources a blessing or a curse for human development this article attempts to answer the question by distinguishing between a dependence on natural resources and an abundance of the same dependence is measured in terms of exports of metals and fuel while resource abundance is calculated on the basis of the subsoil assets per square kilometre and per capita results show the existence of a negative correlation between metals and ore exports and human development while subsoil assets measures are rather positively related these effects are particularly significant in countries with a comparatively lower institutional quality the cases of botswana the democratic republic of congo and equatorial guinea briefly examined suggest however that the effects of natural resources on human and economic development can be very different and strictly related to specific national political and institutional characteristics

extending the concept of the resource curse natural resources and public spending on health this paper extends the concept of the resource curse by studying whether and through which transmission channels natural resource wealth affects social spending even though the availability of vast natural capital reserves has commonly been linked to the neglect of human development most of the literature has continued to focus on economic performance this paper is the first to empirically investigate the link between natural resource wealth and public health expenditures in light of the hypothesis that resource wealth as a source of unearned state income enhances state autonomy and increases volatility which leads to policies that fail to prioritize human development using a large panel dataset of world countries covering the period from 1995 to 2009 we find a robust significant inverse relationship between natural resource dependence and even abundance and public health spending over time the effect remains significant after controlling for state autonomy volatility and other factors these findings have implications for national authorities as well as the extractive industry governments should be made accountable for natural resource wealth and correct taxation could provide additional resources earmarked for health the extractive industry could increase their investments in sustainable corporate social responsibility operations specifically in the health sector

the paradox of plenty a meta analysis since sachs and warner s seminal article in 1995 numerous studies have addressed the link between natural resources and economic growth although the resource curse effect was commonly accepted at first many articles have challenged its existence and the results found in the literature are ambiguous in this paper we aim to quantitatively review this literature in order to i identify the sources of heterogeneity and ii assess the impact of natural resources on economic growth a meta analysis is performed on 69 empirical studies on the resource curse totaling 1 419 estimates our findings show that i only developing countries suffer from the resource curse although it is soft ii the way natural resources are taken into account is crucial to understand the heterogeneity found in the literature iii the negative impact of the volatility of the terms of trade on growth should be qualified an additional mra performed on indirect effects size also indicate that when institutions are at their best level the resource curse disappears and may be turned into a blessing

rentierism energy and economic growth the case of algeria and egypt 1965 2010 abstract the algerian economy is an example of a high level of rentierism while the egyptian economy shows a low moderate level of rentierism the ardl bounds test approach was used upon annual time series data from 1965 to 2010 the results suggest cointegration for both countries bi causality between energy consumption and growth in the long run was found for algeria there is a reversed negative energy growth nexus adding a new relationship to the traditional four causal hypotheses on the energy growth nexus for egypt we found positive elasticity both of oil price and energy which is in line with the mainstream

resource curse an analysis of causes experiences and possible ways forward abstract higher prices for oil gas and mineral resources have again raised questions about how exporting countries can counter the challenges of resource curse international experience managing the risks of resource curse has varied summarising the continuing discussion on meeting the challenges of the resource curse this paper addresses four questions what are the positive and negative effects of high oil gas and mineral prices on exporters what have been the experiences with managing natural resource revenues can good institutions ensure that natural resource revenues have a positive impact on development and what is the direction for the way forward we argue that the current emphasis on institutions as a potential solution has largely ignored under what conditions institutions are formed and changed

why do some oil producing countries succeed in democracy while others fail summary empirical studies examining the effect of oil on democracy have shown contradictory results this paper offers an explanation in measuring the number of years between the beginning of oil production and the attainment of political independence in oil producing countries we found that the greater the number of years the higher the level of democracy ceteris paribus the types of resources exploited in the colonial period were shown to have influenced institutions nature and the formation of elite which acts to prevent subsequent political reforms this pattern is mitigated in countries that started producing oil far away from their independence

the impacts of state growth management programmes a comparative analysis this paper examines the impact that alternative state planning frameworks have on five dimensions of urban development density the spatial extent of urbanised land area property value public ex

oil rents corruption and state stability evidence from panel data regressions abstract we examine the effects of oil rents on corruption and state stability exploiting the exogenous within country variation of a new measure of oil rents for a panel of 30 oil exporting countries during the period 1992 2005 we find that an increase in oil rents significantly increases corruption significantly deteriorates political rights while at the same time leading to a significant improvement in civil liberties we argue that these findings can be explained by the political elite having an incentive to extend civil liberties but reduce political rights in the presence of oil windfalls to evade redistribution and conflict we support our argument documenting that there is a significant effect of oil rents on corruption in countries with a high share of state participation in oil production while no such link exists in countries where state participation in oil production is low

defying the resource curse explaining successful state owned enterprises in rentier states the article explains how several gulf rentier monarchies have managed to create highly profitable and well managed state owned enterprises soe s confounding expectations of both general soe inefficiency and the particularly poor quality of rentier public sectors it argues that a combination of two factors explains the outcome the absence of a populist mobilizational history and substantive regime autonomy in economic policy making the author concludes that it is necessary to rethink the commonly accepted generalizations both about rentier states and arguably about public sectors in the developing world

corruption and the extractive industries transparency initiative the extractive industries transparency initiative eiti has received much attention as a scheme that can help reduce corruption in mineral rich developing economies to our knowledge this paper provides the first empirical attempt using panel data to explore how eiti membership links to changes in corruption levels we also examine whether the different stages in eiti implementation initial commitment candidature full compliance influence the pace of changes in corruption we find that eiti membership offers on the whole a shielding mechanism against the general tendency of mineral rich countries to experience increases in corruption over time

the voracity effect abstract we analyze an economy that lacks a strong legal political institutional infrastructure and is populated by multiple powerful groups powerful groups dynamically interact via a fiscal process that effectively allows open access to the aggregate capital stock in equilibrium this leads to slow economic growth and a voracity effect by which a shock such as a terms of trade windfall perversely generates a more than proportionate increase in fiscal redistribution and reduces growth we also show that a dilution in the concentration of power leads to faster growth and a less procyclical response to shocks jel f43 o10 o23 o40

natural resources and economic growth a meta analysis summary an important question in development studies is how natural resources richness affects long term economic growth no consensus answer however has yet emerged with approximately 40 of empirical papers finding a negative effect 40 finding no effect and 20 finding a positive effect does the literature taken together imply the existence of the so called natural resource curse in a quantitative survey of 605 estimates reported in 43 studies we find that overall support for the resource curse hypothesis is weak when potential publication bias and method heterogeneity are taken into account our results also suggest that four aspects of study design are especially effective in explaining the differences in results across studies 1 controlling for institutional quality 2 controlling for the level of investment activity 3 distinguishing between different types of natural resources and 4 differentiating between resource dependence and abundance

rule of law and the resource curse abundance versus intensity we examine the resource curse using new data on historic resource stocks and an improved econometric methodology the paper distinguishes between resource abundance stocks and extractive intensity flows focusing on relationships between resources and rule of law previously unavailable information on past resource stocks is estimated we find that economically large initial natural resource stocks are associated with subsequent lower levels of rule of law and do not directly affect growth while raw resource exports do not have a significant effect on rule of law when stocks are included in the analysis but do affect average growth rates sample size is maximized through the use of an emis expectation maximization with importance sampling algorithm to replace missing data minimizing the bias and inefficiency associated with listwise deletion which commonly eliminates half or more of the available data in this setting

natural resources education and economic development economic growth since 1965 has varied inversely with the share of natural capital in national wealth across countries four main channels of transmission from abundant natural resources to stunted economic development are discussed a the dutch disease b rent seeking c overconfidence and d neglect of education public expenditure on education relative to national income expected years of schooling for girls and gross secondary school enrolment are all shown to be inversely related to the share of natural capital in national wealth across countries natural capital appears to crowd out human capital thereby slowing down the pace of economic development

history lessons institutions factor endowments and paths of development in the new world the explanations offered for the contrasting records of long run growth and development among the societies of north and south america most often focus on institutions the traditional explanations for the sources of these differences in institutions typically highlight the significance of national heritage or religion we in contrast argue that a hemispheric perspective across the wide range of colonies established in the new world by the europeans suggests that although there were many influences factor endowments or initial conditions had profound and enduring effects on the long run paths of institutional and economic development followed by the respective economies

it s the rents stupid the political economy of the resource curse a number of studies suggest that natural resources can have a negative impact on the developing prospects of countries empirical results suggest that political economy models of patronage and rent seeking are central to understanding why such a resource curse arises in other words the resource curse is created by certain resource rents leading to dysfunctional behaviour this article introduces the term impartiality enhancing institutions to structure policy debates by distinguishing conditions under which negative effects of resources can be mitigated moreover it is argued that viewing institutions as an equilibrium outcome has implications for the analysis of institutional change policy initiatives that do not promote the impartiality of institutions nor attend to the underlying interests and incentives keeping a bad institutional equilibrium in place will not help lift the resource curse

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

the guardian state and its economic development model abstractthis article outlines the core features of a particular resource led development model the oil rich guardian state its key distinguishing feature from other resource rich economies consists in its strong economic welfare objective function which in line with its exceptional oil wealth renders its population amongst the wealthiest nations in the world however the guardian state also illustrates some of the negative externalities associated with resource wealth namely the policy dilemma of directing seemingly abundant financial resources into the economy the state faces a high propensity for waste and for the systemic dilution of market incentives thereby rendering sustained and self generating economic growth more difficult than in less resource rich economies

the varieties of resource experience natural resource export structures and the political economy of economic growth many oil mineral and plantation crop based economies experienced a substantial deceleration in growth following the commodity boom and bust of the 1970s and early 1980s this article illustrates how countries dependent on point source natural resources those extracted from a narrow geographic or economic base such as oil and minerals and plantation crops are predisposed to heightened economic and social divisions and weakened institutional capacity this in turn impedes their ability to respond effectively to shocks which previous studies have shown to be essential for sustaining rising levels of prosperity analysis of data on classifications of export structure controlling for a wide array of other potential determinants of governance shows that point source and coffee and cocoa exporting countries do relatively poorly across an array of governance indicators these governance effects are not associated simply with being a natural resource exporter countries with natural resource exports that are diffuse relying primarily on livestock and agricultural produce from small family farms do not show the same strong effects and have had more robust growth recoveries

irrigation and autocracy irrigated agriculture makes societies more likely to be ruled by authoritarian regimes ancient societies have long been thought to follow this pattern we empirically show that irrigation affects political regimes even in the present to avoid endogeneity we use geographical and climatic variation to identify irrigation dependent societies we find that countries whose agriculture depended on irrigation are about six points less democratic on the 21 point polity2 scale than countries where agriculture has been rainfed we find qualitatively similar results across regions within countries we argue that the effect has historical origins irrigation allowed landed elites in arid areas to monopolize water and arable land this made elites more powerful and better able to oppose democratization consistent with this conjecture we show that irrigation dependence predicts land inequality both at the country level and in premodern societies surveyed by ethnographers

construction corrupts empirical evidence from a panel of 42 countries the construction sector whether privately or publicly financed is characterized by potentially large rents and government intervention making it vulnerable to corruption consistent with this both case study and survey evidence has been provided highlighting the problem of malfeasance in this sector in this article we test the proposition that a bigger construction sector is likely to be inimical to clean government based on a panel of 42 countries over the period 1995 2011 we control for a range of potentially confounding variables and the expectation that corrupt public officials may favor the development of this sector because it increases the volume of rents available to them our empirical evidence shows that a larger construction sector will tend to increase perceptions of the extent to which public power is exercised for private gain

resource windfalls political regimes and political stability abstract we study theoretically and empirically whether natural resource windfalls affect political regimes we show that windfalls have no effect on democracies while they have heterogeneous political consequences in autocracies in deeply entrenched autocracies the effect of windfalls is virtually nil while in moderately entrenched autocracies windfalls significantly exacerbate the autocratic nature of the political system to frame the empirical work we present a simple model in which political incumbents choose the degree of political contestability and potential challengers decide whether to try to unseat the incumbents the model uncovers a mechanism for the asymmetric impact of resource windfalls on democracies and autocracies as well as the the differential impact within autocracies

natural resources and economic growth the role of investment is it possible that excessive reliance on natural resources affects saving and investment in a way that retards economic growth and thus in the long run the level of output per capita this paper reviews the literature explores the data and compares and contrasts the explanatory power and interplay of natural resources and civil liberties our proxy for institutional variables currently under scrutiny in the literature we propose that natural resource dependence may be viewed as an exogenous factor that impedes economic growth and investment as well as institutions even if we stress that natural resource abundance may be good for growth

inequality does cause underdevelopment insights from a new instrument consistent with the provocative hypothesis of engerman and sokoloff 1997 2000 this paper confirms with cross country data that agricultural endowments predict inequality and inequality predicts development the use of agricultural endowments specifically the abundance of land suitable for growing wheat relative to that suitable for growing sugarcane as an instrument for inequality is this paper s approach to problems of measurement and endogeneity of inequality the paper finds inequality also affects other development outcomes institutions and schooling which the literature has emphasized as mechanisms by which higher inequality lowers per capita income it tests the inequality hypothesis for development institutional quality and schooling against other recent hypotheses in the literature while finding some evidence consistent with other development fundamentals the paper finds high inequality to independently be a large and statistically significant barrier to prosperity good quality institutions and high schooling

the social development effects of primary commodity export dependence on the question of whether natural resources are a curse for growth the jury is still out while waiting for a decision we study whether resource intensity has any effect on social development over and above the effect it might have on income or growth we measure social development by a combination of health and education outcomes and resource intensity by the share of primary commodities in total merchandise exports we find that after controlling for per capita income and other macroeconomic and institutional factors a higher dependence on primary commodity exports is negative for social development the transmission mechanism seems to operate via income inequality and macroeconomic volatility

does natural resource abundance increase latin american income inequality abstract why is income inequality higher in latin america than in east asia is this phenomenon related to the region s natural resource abundance is it a contributor to latin america s slow and narrowly focused human capital accumulation if so can anything be done to reverse the latin american trends or should we think of the region s fate as unalterable to help answer these questions this paper draws upon standard trade theory and cross sectional empirical analysis to demonstrate that natural resource intensive sectors particularly permanent agriculture absorb capital that might otherwise flow to manufacturing this depresses workers incentive to accumulate skill and delays industrialization

oil and women a re examination abstract in a seminal article ross 2008 reports a negative correlation between oil production and women s representation in the labour force and politics across countries this article re examines these relationships exploiting variations in oil endowments to address endogeneity concerns we confirm that oil production causes decline in women s representation additionally we show that consistent with dutch disease effects oil production decreases women s employment in the traded sector however it also leads to an increase in women s employment in the nontraded sector we explore some social consequences of oil production and show that it results in women marrying earlier and having more children

social composition social conflict and economic development this article investigates how the existence of non cooperative social groups that appropriate resources either peacefully or through contest affects economic growth when property rights are unenforceable for symmetric groups it shows that economic growth is generated only in peaceful societies for the case of asymmetric groups rebel equilibria are investigated in which a large majority behaves peacefully although challenged by an aggressive minority the article explains how conflict intensity and the rate of economic growth depend on social fractionalisation general productivity of the economy power of social elites and the ease at which resources are appropriated

income inequality and technology diffusion evidence from developing countries we study the effect of within country income inequality on the diffusion of mobile phones using data on market penetration in a sample of developing countries from 1985 to 1998 mobile phones are an example of international technology originating in industrialized countries and diffusing worldwide we find that income inequality as measured by the income share of the highest earning deciles has a positive effect on the early diffusion of mobile phones and that the estimated effect becomes greater when a measure of agricultural endowments is used as an instrument the instrumental variable results are robust to weak instruments our findings suggest that the diffusion of new technologies originating from industrialized countries may generate yet another channel that links inequality and development

natural resources institutional quality and economic growth in china the resource curse has been mainly studied using cross country samples in this paper we analyze a cross province sample from one country china we focus on the interplay between resource abundance institutional quality and economic growth using two different measures of resource abundance a stock resource reserves and a flow resource revenues and employing various econometric approaches including varying coefficient models we find that resource abundance has a positive effect on economic growth at the provincial level in china between 1990 and 2008 an effect that depends nonlinearly on institutional quality 1995 confidence in courts the west china development drive policy initiated in 2000 caused substantial changes which we investigate through a comparative panel data analysis

minerals institutions openness and growth an empirical analysis competing explanations of the resource curse are tested using panel data the data support the existence of a mineral resource curse for developing countries with weak institutions consistent with the hypothesis that owners of mineral resources use weak institutions and openness to trade to stifle the development of human capital to the detriment of growth in other sectors of the economy manufacturing imports substitute for the development of domestic production so openness to trade correlates with lower growth in mineral dependent economies the dutch disease and debt overhang explanations of the resource curse are not supported

the resource curse what have we learned from two decades of intensive research introduction to the special issue there has been increasing interest in the so called resource curse that is the tendency of resource rich countries to underperform in several development outcomes this has generated a mountain of often contradictory evidence leaving many floundering in the flood of information this special issue compiles eight papers from some of the most prominent contributors to this literature combining original research with critical reflection on the current stock of knowledge the studies collectively emphasise the complexities and conditionalities of the curse its presence intensity is largely context specific depending on the type of resources socio political institutions and linkages with the rest of the economy

revisiting the oil curse does ownership matter summary a large body of literature finds a negative relationship between oil abundance and economic growth the existing empirical evidence on the oil curse however does not account for variations in the ownership of oil this article investigates whether the effect of oil abundance on growth varies with ownership structures it also investigates whether pre existing institutional conditions influence the effect of oil abundance across different ownership structures using a novel database on ownership structures and employing a panel fixed effects estimation method it analyzes a sample of oil exporting developing countries during the period 1984 2005 the results show that the effect of oil abundance on growth varies with ownership structures and is also influenced by the quality of pre existing institutions under state ownership and control oil abundance reduces growth when the institutional quality is poor but increases growth when the institutional quality is good under private ownership on the other hand oil abundance increases growth when the institutional quality is poor but reduces growth when the institutional quality is good the results suggest that ownership matters and countries can avoid the oil curse by choosing an appropriate ownership structure given their pre existing institutional circumstances the policy advice in this article is adopt state ownership and control if the institutions are strong if the institutions are weak transfer ownership to foreign oil companies

funds from non renewable energy resources policy lessons from alaska and alberta abstract we document the use of energy natural resource funds in alaska and alberta and analyze theirs characteristics for further implementation in resource rich countries such funds allow dealing theoretically with intergenerational equity issues corruption and more general institutional problems the performance of both funds is very different depending on the management and composition choices but some policy lessons can be drawn from these two examples importantly the role of a public dividend policy is highlighted as a way to bypass corrupted institutions and to enhance quality of life for poorest people we also emphasize the need to deal with inflation to make the fund sustainable

corruption and the political economy of resource based development a comparison of asia and sub saharan africa we model how the supply and demand for bribes affects resource use by an economy and the reinvestment of resource rents in other assets this requires adjusting the world bank s measure adjusted net savings for any rent dissipation due to corruption the impacts of corruption on long run changes and periodic growth in the adjusted net savings rate are estimated across african and asian economies from 1970 to 2003 corruption rather than resource dependency per se affects negatively the ability of african countries to reinvest resource rents in the short term but for asian countries corruption is less important than point resources corruption influences long run growth in adjusted net savings rates in all countries and is also the pathway through which this growth is affected by patterns of resource use trade and abundance

the resource curse and its potential reversal several recent papers suggest that the negative association between natural resource intensity and economic growth can be reversed if institutional quality is high enough we try to understand this result in more detail by decomposing the resource measure using alternative measures of both resources and institutions and by studying different time periods while an institutional reversal is present in many specifications only ores and metals interacted with the icrg measure of institutional quality consistently have a negative growth effect but a positive interaction that turns the curse around when institutions are good enough

cual es el destino de los paises abundantes en recursos minerales nueva evidencia sobre la relacion entre recursos naturales instituciones y crecimiento economico economies that have large endowments of natural resources especially the ones thatrely on oil and minerals are ofien regarded as unlikely to develop or even seen as cursedby nature it is said that the mineral rents which could be used to trigger a growthprocess have in practice several negative effects that by and large counteract their potentialpositive contributions nevertheless it seems that these results are sensitive tothe measures of resource abundance that are used and mineral resource abundancemight not be necessarily growth retarding this study will evaluate if the arguments touphold that mineral rich countries are dwmed to low economic growth are strong andsound by testing a number of robustness checks on the standard models of resourcesand growth we test if there are any specification bias in the model proposed i n pa rticularof omitted variables and if the resource curse thesis remains robust whenusing other measures of resource abundance and when testing specifically for a mineralrecource curse

cursing the blessings natural resource abundance institutions and economic growth summary since sachs and warner s sachs j d warner a m 1995a natural resource abundance and economic growth nber working paper no 5398 contribution there has been a lively debate on the so called natural resource curse this paper re examines the effects of natural resource abundance on economic growth using new measures of resource endowment and considering the role of institutional quality we find a positive direct empirical relationship between natural resource abundance and economic growth in both ols and 2sls regressions the positive resource effects are particularly strong for subsoil wealth our results also show no evidence of negative indirect effects of natural resources through the institutional channel

natural resources democracy and corruption we study how natural resources can feed corruption and how this effect depends on the quality of the democratic institutions our game theoretic model predicts that resource rents lead to an increase in corruption if the quality of the democratic institutions is relatively poor but not otherwise we use panel data covering the period 1980 to 2004 and 124 countries to test this theoretical prediction our estimates confirm that the relationship between resource rents and corruption depends on the quality of the democratic institutions our main results hold when we control for the effects of income time varying common shocks regional fixed effects and various additional covariates they are also robust across different samples and to the use of various alternative measures of natural resources democracy and corruption

natural resources a curse on education spending abstract in line with the rising interest in harnessing natural resource revenues for economic and human development through productive government investments this paper aims to address an important blind spot in our understanding of the resource curse by contributing innovative insights on how natural resource wealth impacts government priorities and expenditure practices using a large panel dataset of 140 countries covering the period from 1995 to 2009 we find an adverse effect of resource dependence on public education expenditures relative to gdp that is robust to controlling for a range of additional covariates furthermore our findings indicate that this resource curse effect on the government prioritization of education mainly stems from point source natural resources these results are of particular importance for the sustainable management of natural resource wealth in developing countries as they could achieve especially high returns by investing resource revenues in public goods such as education while this paper underlines the importance of institutions and government accountability our findings also raise questions on the role of the private sector as a partner in development as the extractives industry could consider increasing funding for education through corporate social responsibility csr initiatives

the elusive curse of oil abstract our goal is to show that contrary to the claims made in several recent papers the effect of a large endowment of oil and other mineral resources on long term economic growth of countries has been on balance positive moreover the claims of a negative effect of oil and mineral wealth on the countries institutions are called into question