derivatives of the nodal prices in market power screening abstract this paper proposes a novel method for market power screening this method is developed for horizontally and vertically consolidated power markets and is based on the optimal power flow opf model properties it undertakes the calculation and analysis of a matrix of derivatives of the nodal prices with respect to generating unit offer prices the analysis takes into consideration the influence of particular partakers and energy groups on the nodal prices this paper presents a theoretical analysis of the partakers and groups profits as well as a method for the market power screening moreover the issue wherein the lmp model generates prices above the highest bidding price is discussed illustrative case studies and case studies based on the polish wholesale balancing power market model are also presented

the new electricity market of singapore regulatory framework market power and competition abstract this study examines whether the new electricity market of singapore nems is functioning at a workable level of competition the generation market of the nems appears highly concentrated by a four firm concentration ratio or the herfindahl hirschman index however other measures of market power present that the nems is working at close to a competitive market first there seems to be a number of effective competitors in the market second supply margin assessment and residual supply index support that the market is competitive though there are some possibilities in which the largest generator or a few large generators jointly could still have market power third the lerner index of the nems shows that the generation market is fairly competitive and the lerner index adjusted with an industry level price elasticity of demand implies that there has not been much exercise of market power finally vesting contracts a contractual obligation of a specified quantity of electricity supply to the market have appeared to be a strong and effective tool to mitigate market power in the nems the vesting contracts are considered the force behind the lowering in the average uniform singapore electricity price and the lerner index in 2004

the economics of violence in natural states violence is key to understanding human interaction and societal development the natural state of societal organization is that a subset of the population capable of mustering organized large scale violence forms an elite coalition that restrains both violence and coercive appropriation we highlight key mechanisms underlying such natural states our results show that natural states either have a large elite coalition and a high tax rate or a weak elite and a high level of appropriation by a large group of violence specialists outside the elite termed warlords when output elasticity of effort is high it induces elite members to limit their tax rate which in turn promotes warlordism only when the elite coalition is small but still able to control a sizeable share of production as a result of its cooperative quality and a low decisiveness of conflict between elite and warlords do we find comparatively high levels of production and producer welfare our results imply that almost all natural states experience continuous coercion exercised by elite members and violence between elite coalitions and warlords we show that this is not a temporary out of equilibrium situation but a permanent phenomenon as can most conspicuously be observed in parts of sub saharan africa our model thus illustrates the rigidity of natural states

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

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

the big push natural resource booms and growth a simple application of big push reasoning suggests that natural resource booms can be important catalysts for development in poorer countries in this paper we present evidence from seven latin american countries that natural resource booms are sometimes accompa nied by declining per capita gdp we present a model with natural resources increasing returns in the spirit of big push models and expectations to clarify some of the reasons this may happen q 1999 elsevier science b v all rights reserved

reverification of the resource curse hypothesis based on industrial agglomeration evidence from china abstract although the resource curse hypothesis has been supported by many empirical studies focusing on the transnational and regional levels there has always been a point of contention about the proper method of estimating and selecting natural resource indicators in literature this paper proposes a mixed estimation method for panel data of 10 typical oil and gas resource based cities in china from 1998 to 2015 the results show that resource industry agglomeration can mirror the distribution and dependence on the resource industry by location rather than by merely measuring the influence of the relative scale of resource extraction on economic growth using resource industry agglomeration as the main explanatory variable for regional economic growth verifies the resource curse hypothesis and shows the nonlinear characteristics of the negative correlation between resources and economic growth despite mostly similar indicator parameter estimates marked differences exist in measured effects for material capital investments and technological innovation investments the result of using resource industry agglomeration as the main explanatory variable is basically consistent with the economic theory and is more in line with observed reality than the alternative indicator the research conclusions can provide evidence and data for index selection in the studies on the mediating effect of resource curse transmission and international comparison

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

crime rates and local labor market opportunities in the united states 1979 1997 the labor market prospects of young unskilled men fell dramatically in the 1980s and improved in the 1990s crime rates show a reverse pattern increasing during the 1980s and falling in the 1990s because young unskilled men commit most crime this paper seeks to establish a causal relationship between the two trends previous work on the relationship between labor markets and crime focused mainly on the relationship between the unemployment rate and crime and found inconclusive results in contrast this paper examines the impact of both wages and unemployment on crime and uses instrumental variables to establish causality we conclude that both wages and unemployment are significantly related to crime but that wages played a larger role in the crime trends over the last few decades these results are robust to the inclusion of deterrence variables controls for simultaneity and controlling for individual and family characteristics

oligarchy democracy inequality and growth abstract this paper analyses the dynamics of inequality democratization and economic development in a political economy model of growth where education is both the engine of growth and a determinant of political participation in a context with imperfect capital markets we investigate the incentives for an educated oligarchy to subsidize the poor s education and to initiate a democratic transition we characterize the equilibrium patterns of political institutions income distribution and growth as a function of the initial income and inequalities in particular we identify circumstances under which the elite promotes the endogenous emergence of a middle class for purely political economy reasons a simple linear infinite horizon framework is then presented in this setting we discuss the importance of historical dependence for long run social stratification and redistribution

commodity price instability and economic goal attainment in developing countries abstract this paper reviews the theoretical and empirical micro and macro foundations for the frequent claims that instabilities in international commodity markets have deleterious effects on goal attainment in primary commodity exporting developing countries this review leads to the conclusion that the available evidence does not support these claims the paper concludes with speculation on why such claims are so strong despite the lack of supporting evidence perhaps it is because of measurement problems and perhaps because of small but articulate groups with vested interests in overstating the problem

market power analysis for the iranian electricity market the market power problem in iranian electricity market is addressed in this study this paper by using various structural indices of market power and reviewing market results analyzes the intensity of competition in iran s electricity market and examines whether this market is functioning at an appropriate level of efficiency in this article the most well known indices of market power are calculated in two approaches for two different scenarios current situation and future outlook of generation sector s ownership in iran s power industry comparing the results of these scenarios promises more competitive market for the second scenario calculating residual supply index for iran s power market shows despite admissible values of concentration ratios due to supply scarcity during periods when the demand is close to the total available capacity some suppliers can exercise market power even with a relatively small market share the most important price and load indices like weighted average prices and load price duration curves of iranian electricity market during march 2007 march 2008 are also analyzed in this paper these results imply the existence of economic withholding the main limiting factors of competition and significant implemented countermeasures for market power mitigation in iran s electricity market are also mentioned

the effects of volatility in the terms of trade on output growth new evidence abstract this paper examines the empirical evidence for the hypothesis that there is a negative relationship between terms of trade volatility and output growth it finds a statistically significant link between income terms of trade volatility and lower growth rates when the degree of volatility in the income terms of trade is decomposed into its components fluctuations in real exports are of a magnitude similar to those in the relative price of tradables similarly the volatility in the net barter terms of trade is equally affected by variations in the price of exports and of imports any policies aimed at stabilizing the terms of trade or any of its components need to take account of this

oil and democracy endogenous natural resources and the political resource curse by the end of the twentieth century a scholarly consensus emerged around the idea that oil fuels authoritarianism and slow growth the natural abundance once thought to be a blessing was unconditionally and then later only conditionally a curse for political and economic development we re examine the relationship between oil wealth and political regimes challenging the conventional wisdom that such natural resource rents lead to authoritarian outcomes we contend that most efforts to examine the causal linkages between natural resource abundance and political regime have been complicated by the likelihood that both democracy and oil revenue are endogenous to the industrialization processes itself particularly in its developmentalist form our quantitative results based on an analysis of global data from 1970 to 2006 show that both resource endogeneity and several mechanisms of intraregional regime diffusion are powerful determinants of democratic outcomes qualitative evidence from the history of industrialization in latin america yields support for our proposed causal claim oil wealth is not necessarily a curse and may even be a blessing with respect to democratic development

the political economy of resource driven growth abstract in recent decades resource poor countries have out performed resource abundant ones a stylised facts model of competitive industrialisation describes the long run development of a resource poor country with a political state that is developmental only minor change is required to adapt the model to trace the development trajectory of a resource abundant country with a similar political state however most resource abundant countries engender a political state that is factional or predatory and distorts the economy in the pursuit of rents a staple trap model describes the development trajectory under these conditions the model predicts a growth collapse from which recovery is protracted especially for small economies that lack a niche trade link with a large economy

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

effective market monitoring in deregulated electricity markets experience with deregulated electricity markets has shown that the assumption that markets will naturally produce competitive results is not justified the existing independent system operators isos and emerging regional transmission organizations rtos all have developed or are developing systems and procedures to accomplish the monitoring task in their markets this paper provides an overview of the key elements necessary for effective design and implementation of market monitoring systems market monitoring must be concerned primarily with ensuring efficient market performance by identifying market inefficiencies the potential for market abuses and market power problems in this paper we define market power and identify factors that allow the exercise of market power in electricity markets we also propose market efficiency objectives that should be used to design market rules that discourage gaming we then identify the issues relevant to designing and implementing an effective market monitoring function

reward structures and the allocation of talent as relative rewards that different professions receive are a key factor in the allocation of talent what determines the reward structure of a society is an important question this paper develops an equilibrium model of the allocation of talent between productive and unproductive activities such as rent seeking the existence of rent seeking creates a negative externality on productive agents and implies that relative rewards are endogenously determined the same externality can also lead to the existence of multiple equilibria each with different reward structures in a dynamic setting allocations of past generations as well as expectations of future allocations influence current rewards and the society may get trapped in a rent seeking steady state equilibrium the paper also discusses how the non pecuniary reward structure can be influenced by equilibrium selection and a historical example that suggests the presence of a causal link from the allocation of talent to non pecuniary rewards

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

destructive competition factionalism and rent seeking in iran summary the literature on the resource curse suggests that the quality of institutions determines a country s ability to transform resource wealth into economic development this article explores the link between resource rents institutions and economic performance by focusing on the case of iran a key feature of iran s institutional environment is its factionalized political system we give an introduction to the main actors vying for control over the country s resources and analyze the effect of their destructive competition using a theoretical model we study how oil revenues and the relative strength of interest groups affect private investment and economic efficiency

learning to love the dutch disease evidence from the mineral economies abstract recent literature proposes that a booming minerals sector may not only lead to dutch disease effects it may also be a development curse mineral economy case studies have tentatively confirmed this recourse curse thesis this paper examines the long run economic and development performance of a more general grouping of mineral based economies and finds little corroborating evidence

the resource curse a statistical mirage abstract a surprising feature of resource rich economies is slow growth it is often argued that natural resource production impedes development by creating market or institutional failures this paper establishes an alternative explanation a slow growing resource sector a declining resource sector is disproportionately reflected in resource dependent countries additionally there is little evidence that resource dependence impedes growth in non resource sectors more generally this paper illustrates the importance of considering industry composition in cross country growth regressions

export fluctuations and economic growth an empirical analysis abstract the uncertainty associated with trade variability is generally resumed to exert a significant effect on the domestic economy of loss developed countries inadequately equipped to cope with these fluctuations the belief that it has a negative influence on these economies has been for several decades the dominant hypothesis among economists but it has been challenged on both theoretical and empirical growths the present paper proposes to investigate this problem from an empirical point of view cross country analysis is developed to investigate the influence of export instability on the domestic economy of less advanced nations the results show that no clear conclusions for the general case can be provided since they are sensitive to the particular time period considered a negative impact can be expected when price and quantity instability appear to reinforce each other but this is not always the case

long run trends in 26 primary commodity prices abstract this paper uses time series techniques to re examine the prebisch singer hypothesis that there has been a secular deterioration in primary commodity prices in terms of manufactured goods instead of using price indices it considers 26 individual commodity prices over the period 1900 1983 this avoids possible aggregation and interpretation problems associated with the use of aggregate indices the study finds that 16 of the 26 prices are trendless five have statistically significant negative trends the remaining five have positive trends it concludes that the prebisch singer hypothesis should certainly not be considered a universal phenomenon or stylized fact

rent seeking and resource booms abstract this paper develops a model of rent seeking in which the opportunity cost of rent seeking is foregone entrepreneurship it provides conditions under which resource booms tend to lead to an increase in rent seeking activity and those in which they induce entrepreneurship we identify an important difference between the two activities which leads resource booms to bias gains in favour of rent seeking over entrepreneurship but we also show that this bias depends on the nature of the initial equilibrium

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

mission improbable does petroleum related aid address the resource curse petroleum related aid programmes and projects are a key part of donor activities in oil rich developing countries this paper critically assesses petroleum related aid activities using the norwegian oil for development programme as a main case recent research suggests that institutions or governance are essential in averting a resource curse while governance issues are beginning to receive more attention in these types of programmes they still form a minor part of programme activities the narrow sector focus that characterizes petroleum related aid makes it unlikely that it will produce the higher order institutional changes needed to lift the resource curse petroleum related aid activities address the issue of corruption only to a limited extent given the commercial and political interests of donor countries questions about the integrity and credibility of these types of programmes can be raised

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

contesting resources rent seeking conflict and the natural resource curse a growing empirical literature links natural resource abundance and pointiness to impeded economic growth and civil strife we develop rent seeking and conflict models that capture the most salient features of contests for resource rents and show how both resource abundance and geographical clustering can be associated with intense contests and sub optimal economic performance however we also show that these relationships are not necessarily monotonous pointiness can trigger more intense contests but can also facilitate the coordination on peaceful outcomes finally we show that contesting resources through violent conflict may yield superior outcomes from an economy wide perspective than contests through rent seeking

resource intensity institutions and development summary we examine the relationship between resource abundance and several indicators of human welfare consistent with the existing literature on the relationship between resource abundance and economic growth we find that given an initial income level resource intensive countries tend to suffer lower levels of human development while we find only weak support for a direct link between resources and welfare there is an indirect link that operates through institutional quality there are also significant differences in the effects that resources have on different measures of institutional quality these results imply that the resource curse is a more encompassing phenomenon than previously considered and that key differences exist between the effects of different resource types on various aspects of governance and human welfare 2005 elsevier ltd all rights reserved

putting up or shutting up on the individual level relationship between taxpaying and political interest in a developmental context abstracthistorical research mainly focused on early modern europe has suggested a positive link between taxation and democracy this study approaches the connection in a present day developmental context by looking at differences between taxpayers and non taxpaying citizens in terms of political interest a precondition for accountability demands using survey data from sub saharan africa a multilevel analysis shows that taxpaying increases political interest the causal direction of this finding is confirmed through an instrumental variable analysis the results support the existence of the mechanisms underlying the theory of taxation working as a generator of political engagement and democracy

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

welfare outcomes and the advance of the deforestation frontier in the brazilian amazon summary frontier expansion in the brazilian amazon is often described as boom bust development we critically assess this characterization by mapping and estimating statistical models of welfare as a function of deforestation at the municipal level after controlling for potential confounding variables and spatial autocorrelation estimation results are consistent with a frontier boom generated by exploitation of natural resources followed by a bust during which forests continue to fall but there is no compensating gain in welfare however average per capita welfare increases again with deforestation at very high levels this second turning point in average welfare along with the strong bivariate correlation between deforestation and municipal gdp km2 may encourage local leaders to equate deforestation with development this confirms the need for international incentive payments for global public goods such as biodiversity and carbon sequestration that are provided by the amazon forest

energy security and improvements in the function of diversity indices taiwan energy supply structure case study abstract facing the risk and uncertainty inherent in social and economic development many countries have adopted an energy supply diversification strategy in their energy security policy to control the energy import risk and cost to ensure that sufficient energy can be obtained at an affordable price level diversification helps the energy system respond to external changes and shocks diversification can also lessen the vulnerability of a single energy source to supply shocks and the market power of various energy supply sources this study develops the diversity reliability index and co vary diversity reliability index based on the hirschman herfindahl and shannon wiener indices investigates the contribution of different energy sources to the energy system and analyzes the covariance between various energies and their impacts on energy security to determine the impact of energy diversity in reducing the risk of energy supply shortages and cost fluctuations

modeling market power in korea s emerging power market abstract the korean power market is being formed from the unbundled generation transmission and distribution assets of korea electric power corporation the kepco generation has been allocated to six independent gencos with a combined generating capacity of 46 629 mw in 2002 this gave an 11 margin over the peak load that year 41 921 mw one of the concerns for any power market is whether individual participants can increase profits and prices by withholding generation from the market to address this concern a cournot based model of korean power system was created and applied to a set of loads representing the load duration curve for korea s system loads in 2002 our simulation results show a strong possibility for exercise of market power to increase market price in korean market under tight market conditions even 1 gw of withholding can cause a large increase in market price if loads unexpectedly grow faster than the 5 recent experience the gencos will have the collective ability and incentive to spike prices further vesting contracts can reduce the incentive to act strategically requiring that the gencos offer 50 of their capacity in long term forward contracts greatly reduces the payoff to act strategically and requiring vesting for 75 of their capacity results in prices that are essentially the same as the competitive equilibrium depending on the price for the vesting contracts this policy can reduce the incentives to add new generation by gencos or the competitive fringe another approach to reducing the effects of market power is establishing demand response programs simulated here by increasing the elasticity of overall demand these programs can reduce the incentives to withhold capacity but to a lesser degree than vesting contracts the genco with the greatest ability to influence prices through withholding is the largest knhp however acting on its own without the support of the other gencos its ability to raise prices is limited this applies even more for the other gencos alone their ability to run up prices by withholding is limited only when they reinforce each other s withholding by further withholding do we see the extreme prices of the cournot equilibrium in the long run the high prices from the cournot equilibrium create a strong incentive for entry of new generating capacity while the gencos that do the most withholding in the cournot solution do not gain by adding new generation several of the gencos that do relatively less withholding would gain net revenues from adding capacity that is likely to exceed the cost of new capacity for participants on the competitive fringe the incentives to add new generating capacity are much stronger they do not have a stake in maintaining the high cournot solution prices and benefit from increased withholding by the incumbent gencos the projected net revenues from new baseload and peaking capacity greatly exceed the thresholds needed to recover investment costs with freedom for new entrants to add capacity the cournot equilibrium prices cannot be sustained

cursed by resources or institutions natural resource abundant countries constitute both growth losers and growth winners and the main difference between the success cases and the cases of failure lays in the quality of institutions with grabber friendly institutions more natural resources push aggregate income down while with producer friendly institutions more natural resources increase income such a theory finds strong support in data a key question we also discuss is if resources in addition alter the quality of institutions when that is the case countries with bad institutions suffer a double resource curse as the deterioration of institutions strenghtens the negative effect of more natural resources

friends with benefits how political connections help to sustain private enterprise growth in china by analysing data from a survey of 511 chinese private enterprises we find that their owners respond to government discrimination by developing political connections with government officials a one standard deviation increase in the insecurity of property rights has the effect of increasing the number of friends in the government by a substantial 22 these friends significantly help to mitigate by half the negative effect arising from the difficulties of obtaining land and excessive regulations on enterprise growth this explains why an institutional environment of weak property rights has not stopped private enterprises in china from developing rapidly

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

savings growth and the resource curse hypothesis an important connection between recent attempts to understand the determinants of economic growth and the measurement of sustainability is the finding of a negative and significant relationship between natural resource abundance and economic growth this is the so called resource curse hypothesis using cross country regressions we offer evidence that the curse may itself be a manifestation of the inability of governments to manage large resource revenues sustainably in particular these results offer another perspective on the resource curse hypothesis the countries where growth has lagged are those where the combination of natural resource macroeconomic and public expenditure policies have led to a low rate of genuine saving net saving adjusted for resource depletion

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

natural resources rent seeking and welfare abstract a new and very simple mechanism to explain why natural resource abundance may lower income and welfare is developed in a model with rent seeking a greater amount of natural resources increases the number of entrepreneurs engaged in rent seeking and reduces the number of entrepreneurs running productive firms with a demand externality it is shown that the drop in income as a result of this is higher than the increase in income from the natural resource more natural resources thus lead to lower welfare

institutions and the resource curse countries rich in natural resources constitute both growth losers and growth winners we claim that the main reason for these diverging experiences is differences in the quality of institutions more natural resources push aggregate income down when institutions are grabber friendly while more resources raise income when institutions are producer friendly we test this theory building on sachs and warner s influential works on the resource curse our main hypothesis that institutions are decisive for the resource curse is confirmed our results contrast the claims of sachs and warner that institutions do not play a role

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

demographic transition in resource rich countries a blessing or a curse summary this study argues that resource wealth is a key factor for understanding income effects of demographic transition we develop a simple model highlighting how the income effect of increased labor supply may depend on resource rents and provide empirical evidence that support the theoretical predictions using panel data covering the period from 1982 to 2006 for more than 120 countries we find a negative interaction effect between resource wealth and demographic transition on national income moreover the negative interaction effect does not depend on institutional quality and is found also across different samples

corruption and reduced oil production an additional resource curse factor prominent contributions to the resource curse literature suggest weak governance and corruption are important factors behind the wide welfare variations observed among oil producing countries how weak governance and corruption influence revenue management and expenditure decisions as well as the possible welfare benefits derived from oil are broadly discussed how they impact upon volumes of oil produced has however attracted little attention this paper combines a review of the resource curse and oil production literatures with findings from qualitative interviews with oil sector experts to appreciate the feasibility of connections between corruption and oil production below its potential we make particular reference to environments where regulatory institutions or political accountability are weak and focus primarily on producer government and oil firm relations drawing on insights from geology political science and economics we suggest suboptimal production solutions can impact volumes of oil actually produced and create constraints on long term revenues for oil producing countries we argue greater disclosure of information on oil production efficiency on a field by field and country by country basis will assist further investigation of the relationships between corruption and volumes of oil produced

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

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

learning by doing and the dutch disease this paper develops a model of learning by doing and the dutch disease that extends the earlier literature in two ways first it is assumed that both the traded and the non traded sector can contribute to learning second it is assumed that there are learning spillovers between the sectors it is shown that within such a model a foreign exchange gift results in a real exchange rate depreciation in the long run due to a shift in the steady state relative productivity between the traded and the non traded sector in contrast to standard models of the dutch disease production and productivity in both sectors may go up or down the conditions for the different cases are worked out

a new look at the effects of export instability on investment and growth abstract this paper is concerned with the effects of export instability on investment and growth it is shown that past cross sectional empirical studies on the effects of export instability either in prices or in value terms used an incorrect measure of instability that does not properly take account of the share of exports in gdp using a new instability index and a broad set of conditioning variables it is shown that export instability was positively associated with investment but negatively associated with growth in a large sample of countries during the period from the early 1970s to the mid 1980s

buen vivir vs development ii the limits of neo extractivism like the entire andean region ecuador has an economic structure that is dependent on primary exports during the last boom in commodity prices the neo extractivist development strategy generated economic growth and simultaneously reduced inequality however this bonanza was not used to advance in economic diversification or for transition towards buen vivir sumak kawsay good living as postulated in the constitution and the national development plans we establish that neo extractivism is not compatible with buen vivir analysing three concrete aspects to this end the failure to fulfill the rights of nature and ecological sustainability the lack of advances in transforming the productive matrix insufficient results in matters of redistributive social policies

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 curse of the haven the impact of multinational enterprise on environmental regulation abstract we analyze the behavior of multinational enterprises in the context of resource rich and poor countries and regarding high and low income countries we depart from the pollution haven hypothesis and the resource curse the pollution haven hypothesis states that multinational enterprises move their dirty operations to countries with weak environmental regulation the resource curse holds that economic growth in countries abundant in natural resources is reduced we find that more polluting firms are relatively more often located in countries with weak environmental regulation however multinational enterprises do not have a significant impact on environmental regulation in the host country it appears that it is mainly the quality of institutions that drives both the pollution haven and the resource curse

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

economic freedom and productivity growth in resource rich economies summary the focus of this paper is to test whether free market institutions that protect property rights and support freedom of choice and voluntary exchange can change the curse of natural resources into a blessing to examine the above question this paper uses the fraser institute s economic freedom index and its five sub indices namely government size property rights access to sound money freedom to trade and setting proper regulations using data from 99 sample countries over the period 1970 2010 the system gmm estimates suggest that the negative growth effects of resource rents may turn positive in countries with greater economic freedom

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

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

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

natural resources and the tradeoff between authoritarianism and development abstract why do african and middle eastern countries seem cursed by an abundance of natural resources yet usa australia and norway seem blessed a growing literature has argued that the benevolence or malignance of natural resources depends upon the quality of institutions this paper offers a new explanation based on associational freedom and its interaction with the political system the model predicts that natural resources have an adverse impact on economic performance and transition to democracy in authoritarian regimes but not in democracies it also predicts that repression of associational freedom will be increasing in natural resources in authoritarian regimes i test the model s predictions using fixed effects regressions on an international panel from 1975 to 2000 and find support

export instability export growth and gdp growth abstract the positive correlation between export instability and export expansion reported by lam in a recent paper is shown to be the result of a bias caused by the manner in which the instability index was calculated and by using data series which end in a year of unusually high exports it is shown that when correction is made for these factors there is no statistically significant correlation between export instability and export expansion or domestic income expansion

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

mining away the preston curve summary i estimate the long term national health and education impacts of having a larger mining share in the economy by instrumenting the relative size of the mining sector with the natural geological variation in countries fossil fuel endowments i provide evidence suggestive of a causal relationship the findings suggest that countries with larger mining shares tend to have poorer health and education outcomes than countries with similar per capita incomes geographic characteristics and institutional quality doubling the mining share of an economy corresponds to on average the infant death rate being 20 higher life expectancy being 5 lower total years of education being 20 lower and 70 more people having no formal education divergences from the preston curve the concave relationship between cross country income and life expectancy that has long been of interest to economists demographers and epidemiologists are thus partly explained by the size of the mining sector within country evidence from indonesia paints a similar picture my results provide support for a growing body of evidence linking mining to poorer average living standards particularly vis a vis other types of income i also estimate the effects of national mining dependence on non mining income health and education investment and institutions

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

short term market power assessment in a long term dynamic modeling of capacity investment this paper proposes a dynamic time simulation model for long term generation capacity investment decisions in the presence of either perfect or imperfect electricity market the model is based on system dynamics concept in which the dynamics of capacity construction is traced using the forecast of electricity price cleared in the short term electricity market both the perfect and oligopolistic competitions are considered and a market power index is defined to evaluate the competition level of the electricity market the short term and long term dynamic analysis are used to represent the generation firms behavior in bidding strategy and capacity investment respectively both possibilities of using forward bilateral contracts and application of wind power generation have been assessed individually in the proposed model in order to mitigate the market power the time simulation results derived from a case study demonstrate the effectiveness of the model in illustrating the oligopoly in electricity marketplace and also the alternative decisions to attenuate it such a decision tool enables both the generation firms and the regulators to gain perfect insight into the oligopoly and its consequences in the long term capacity investment in the electricity market