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Resource Curse and Power Balance: Evidence from Oil-Rich Countries

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  • Bjorvatn, Kjetil
  • Farzanegan, Mohammad Reza
  • Schneider, Friedrich

Abstract

We examine the role of political fractionalization in understanding the “resource curse”. Using panel data for 30 oil-rich countries, we find that the income effect of resource rents is moderated by the political power balance. With a strong government, resource wealth can generate growth even in an environment of poorly developed institutions, while adding oil revenues to a weak government may have damaging effects on the economy. These results have important implications for the economic prospects of the oil-rich countries in the Middle East, which are currently undergoing profound political changes.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 40 (2012)
Issue (Month): 7 ()
Pages: 1308-1316

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Handle: RePEc:eee:wdevel:v:40:y:2012:i:7:p:1308-1316

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: oil rents; balance of power; resource curse;

References

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Citations

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Cited by:
  1. Mohammad Reza Farzanegan & Mohammad Habibpour, 2014. "Direct Distribution of Rents and the Resource Curse in Iran: A Micro-econometric Analysis," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 201425, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  2. Seghir, Majda & Damette, Olivier, 2013. "Natural resource curse: a non linear approach in a panel of oil exporting countries," MPRA Paper 51604, University Library of Munich, Germany.
  3. Kjetil Bjorvatn & Mohammad Reza Farzanegan, 2014. "Resource rents, power, and political stability," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 201419, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  4. Bjorvatn, Kjetil & Farzanegan, Mohammad Reza, 2013. "Demographic Transition in Resource Rich Countries: A Blessing or a Curse?," World Development, Elsevier, Elsevier, vol. 45(C), pages 337-351.
  5. Mohammad Reza Farzanegan, 2014. "Can Oil-Rich Countries Encourage Entrepreneurship? ‘Yes’, ‘No’ but not ‘Perhaps’," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 201406, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  6. Naotaka Sugawara, 2014. "From Volatility to Stability in Expenditure: Stabilization Funds in Resource-Rich Countries," IMF Working Papers 14/43, International Monetary Fund.

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