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On the looting of nations

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Author Info

  • Mare Sarr

    ()

  • Erwin Bulte

    ()

  • Chris Meissner

    ()

  • Tim Swanson

    ()

Abstract

We develop a dynamic discrete choice model of an unchecked ruler making decisions regarding the development of a resource-rich country. Resources serve as collateral and facilitate the acquisition of loans. The ruler chooses either to stay in power while facing the risk of being ousted, or loot the country’s riches by liquefying the resources through lending. We show that unstructured lending from international credit markets can create incentives to loot the country; and an enhanced likelihood of looting causes greater political instability, and diminishes growth. Using a treatment effects model, we find strong evidence that supports our predictions.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s11127-010-9659-9
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Bibliographic Info

Article provided by Springer in its journal Public Choice.

Volume (Year): 148 (2011)
Issue (Month): 3 (September)
Pages: 353-380

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Handle: RePEc:kap:pubcho:v:148:y:2011:i:3:p:353-380

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Web page: http://www.springerlink.com/link.asp?id=100332

Related research

Keywords: Natural resource curse; Economic growth; Dictatorship; Looting; Odious debt; O11; O13; O16;

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References

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Citations

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Cited by:
  1. Zenthöfer, A.F., 2013. "Essays on development economics," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5906745, Tilburg University.
  2. Mare Sarr & Tim Swanson, 2013. "Corruption and the Curse: The Dictator’s Choice," Working Papers 2013.06, Fondazione Eni Enrico Mattei.
  3. J Paul Dunne & Nan Tian, 2013. "Military Expenditure, Economic Growth and Heterogeneity," SALDRU Working Papers 95, Southern Africa Labour and Development Research Unit, University of Cape Town.

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