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Shifting Frontiers in Global Resource Wealth: The Role of Policies and Institutions

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  • van der Ploeg, Frederick
  • Arezki, Rabah
  • Toscani, Frederik

Abstract

This paper explores the impact of increased market orientation and improved institutions on global resource wealth using a novel dataset of major hydrocarbon and mineral discoveries. Guided by the predictions of a two-region model, we employ an instrumental variable strategy to test whether increased market orientation boosts discoveries. Our results indicate that if Latin America and sub-Saharan Africa were to adopt the same quality of institutions as the United States, discoveries worldwide would increase by 25 percent. Our results support the primacy of institutions by calling into question the commonly held view that resource endowments are exogenous.

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  • van der Ploeg, Frederick & Arezki, Rabah & Toscani, Frederik, 2016. "Shifting Frontiers in Global Resource Wealth: The Role of Policies and Institutions," CEPR Discussion Papers 11553, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11553
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    Cited by:

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    3. Christopher Hartwell & Roman Horvath & Eva Horvathova & Olga Popova, 2022. "Natural resources and income inequality in developed countries: synthetic control method evidence," Empirical Economics, Springer, vol. 62(2), pages 297-338, February.
    4. Julien Daubanes & Pierre Lasserre, 2019. "The supply of non-renewable resources," Canadian Journal of Economics, Canadian Economics Association, vol. 52(3), pages 1084-1111, August.
    5. Thorsten Beck & Steven Poelhekke, 2017. "Follow the money: Does the Financial Sector Intermediate Natural Resource Windfalls?," Tinbergen Institute Discussion Papers 17-027/VIII, Tinbergen Institute.
    6. Amir Lebdioui, 2021. "Are we measuring natural resource wealth correctly?: A reconceptualization of natural resource value in the era of climate change," WIDER Working Paper Series wp-2021-18, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Natural resources; Discoveries; Institutions; Market orientation; Liberalization; Endogenous reserves;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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