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Corruption in natural resource management: Implications for policy makers

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  • Kolstad, Ivar
  • Søreide, Tina

Abstract

Corruption is the main reason why resource-rich countries perform badly in economic terms. Corruption in resource-rich countries takes two main forms, rent-seeking and patronage. Resource rents induce rent-seeking as individuals compete for a share of the rents rather than use their time and skills more productively. And resource revenues induce patronage as governments pay off supporters to stay in power, resulting in reduced accountability and an inferior allocation of public funds. This paper systematically reviews the literature on natural resources and corruption, and outlines the main policy implications for donors and domestic policy makers. A main conclusion is that priority should be given to policies that address rent-seeking and patronage. In other words, policy in resource-rich countries should be less about macro-economic management and more about institutions to prevent rent-seeking and patronage, and about giving the right incentives to players in the resource sector. Moreover, all policies need to take into account their impact on rent-seeking and patronage, and some current policies may actually be harmful in this respect.

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Bibliographic Info

Article provided by Elsevier in its journal Resources Policy.

Volume (Year): 34 (2009)
Issue (Month): 4 (December)
Pages: 214-226

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Handle: RePEc:eee:jrpoli:v:34:y:2009:i:4:p:214-226

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Web page: http://www.elsevier.com/locate/inca/30467

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Keywords: Corruption Natural resources Resource curse Institutions Aid;

References

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Citations

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Cited by:
  1. Kolstad, Ivar & Wiig, Arne, 2012. "Testing The Pearl Hypothesis: Natural resources and trust," Resources Policy, Elsevier, vol. 37(3), pages 358-367.
  2. Sarmidi, Tamat & Siong Hook, Law & Jafari, Yaghoob, 2012. "Resource curse: new evidence on the role of institutions," MPRA Paper 37206, University Library of Munich, Germany.
  3. Schmaljohann, Maya, 2013. "Enhancing Foreign Direct Investment via Transparency? Evaluating the Effects of the EITI on FDI," Working Papers 538, University of Heidelberg, Department of Economics.
  4. Kolstad, Ivar & Wiig, Arne & Williams, Aled, 2009. "Mission improbable: Does petroleum-related aid address the resource curse?," Energy Policy, Elsevier, vol. 37(3), pages 954-965, March.
  5. Hansen, Christian P. & Lund, Jens F., 2011. "The political economy of timber taxation: The case of Ghana," Forest Policy and Economics, Elsevier, vol. 13(8), pages 630-641, October.
  6. Mare Sarr & Tim Swanson, 2013. "Corruption and the Curse: The Dictator’s Choice," Working Papers 2013.06, Fondazione Eni Enrico Mattei.
  7. Schmaljohann, Maya, 2013. "Enhancing Foreign Direct Investment via Transparency? Evaluating the Effects of the EITI on FDI," Working Papers 0538, University of Heidelberg, Department of Economics.
  8. Tsani, Stella, 2013. "Natural resources, governance and institutional quality: The role of resource funds," Resources Policy, Elsevier, vol. 38(2), pages 181-195.
  9. Ousman Gajigo & Emelly Mutambatsere & Guirane Samba Ndiaye, 2012. "Working Paper 147 - Gold Mining in Africa-Maximizing Economic Returns for Countries," Working Paper Series 378, African Development Bank.
  10. Gboyega, Alex & Soreide, Tina & Le, Tuan Minh & Shukla, G. P., 2011. "Political economy of the petroleum sector in Nigeria," Policy Research Working Paper Series 5779, The World Bank.
  11. Gabriel Mougani, 2012. "Working Paper 144 - An Analysis of the Impact of Financial Integration on Economic Activity and Macroeconomic Volatility in Africa within the Financial Globalization Context," Working Paper Series 375, African Development Bank.

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