Natural-Resource Wealth: Elbow Grease or Fuel for Poverty?
AbstractWe consider the effect of natural resources on growth using a two-sector model (resource and nonresource). Government taxes the nonresource sector and chooses institutional quality, which determines productivity in the nonresource sector and the government's ability to appropriate resource rents. We find that resource booms harm institutions. Their effect on growth depends on relative sector sizes: when rents are more substantial, governments are likelier to corrupt institutions to secure larger shares of rents. Cross-country panel data substantiate the results: countries in the bottom tercile of value added in manufacturing and services divided by GDP are cursed by resources; others are blessed.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 167 (2011)
Issue (Month): 3 (September)
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Web page: http://www.mohr.de/jite
Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany
Find related papers by JEL classification:
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
- Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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