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Natural Resources And International Capital Flows

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Author Info

  • MAGDEFRAU Melissa

    (University of Central Arkansas, USA)

  • THOMAS Snyder

    (University of Central Arkansas, USA)

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    Abstract

    This study examines the relationship between international capital flows and natural resources, with a focus on natural resources’ detrimental effect on institutions. In a cross-country OLS regression, natural resources appear to have a negative relationship with capital inflows when institutional quality is not controlled for. However, natural resources have a positive or insignificant relationship with capital inflows when institutions are controlled for. In a two-stage OLS regression, natural resources have a negative relationship with capital inflows through its negative effect on institutions. The measurement of institutions is taken from the Economic Freedom index by the Frasier Institute, while four different measurements of natural resource abundance are used. In particular, agriculture abundance has an indirect negative effect on capital inflows through its detrimental effect on economic freedom.

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    File URL: http://eccsf.ulbsibiu.ro/RePEc/blg/journl/836magdefrau&thomas.pdf
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    Bibliographic Info

    Article provided by Lucian Blaga University of Sibiu, Faculty of Economic Sciences in its journal Studies in Business and Economics.

    Volume (Year): 8 (2013)
    Issue (Month): 3 (Decembre)
    Pages: 56-71

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    Handle: RePEc:blg:journl:v:8:y:2013:i:3:p:56-71

    Contact details of provider:
    Postal: Lucian Blaga University of Sibiu, Faculty of Economic Sciences Dumbravii Avenue, No 17, postal code 550324, Sibiu, Romania
    Phone: 004 0269 210375
    Fax: 004 0269 210375
    Email:
    Web page: http://economice.ulbsibiu.ro/
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    Related research

    Keywords: Natural Resources; Capital Flows; Institutions;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Laura Alfaro & Sebnem Kalemli-Ozcan, 2004. "Why doesn't capital flow from rich to poor countries? An empirical investigation," 2004 Meeting Papers 53, Society for Economic Dynamics.
    2. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    3. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-48, December.
    4. Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
    5. Gylfason, Thorvaldur, 2004. "Natural Resources and Economic Growth: From Dependence to Diversification," CEPR Discussion Papers 4804, C.E.P.R. Discussion Papers.
    6. James L. Butkiewicz & Halit Yanikkaya, 2010. "Minerals, Institutions, Openness, and Growth: An Empirical Analysis," Land Economics, University of Wisconsin Press, vol. 86(2), pages 313-328.
    7. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, vol. 61(2), pages 527-542, April.
    8. Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
    9. Jonathan Isham & Michael Woolcock & Lant Pritchett & Gwen Busby, 2005. "The Varieties of Resource Experience: Natural Resource Export Structures and the Political Economy of Economic Growth," World Bank Economic Review, World Bank Group, vol. 19(2), pages 141-174.
    10. repec:fth:stanho:e-92-3 is not listed on IDEAS
    11. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
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