Relationship between natural resources and institutions
AbstractThis article analyses through a rent seeking model, the relationship between institutions' quality and natural resources. Depending on the institutions quality, each country has a specific structural capacity to stand natural resources dependency. It is shown that for each country, a threshold exists, such that beyond this point, any additional amounts of natural resources begin to have a negative impact on institutions. As the stock of natural resources increases, this improves the expected profitability of rent seeking, which in turn lowers the quality of institutions. The mechanism comes from a new balance of power within the country. However, the institutional degradation's intensity is determined by social interactions and depends on both the resources nature and their appropriability level. The inverse U-shaped curve obtained from empirical studies presented in this article supports the natural resources non-monotonic effect on institutions found in the model.
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Bibliographic InfoPaper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number bla08060.
Length: 41 pages
Date of creation: Oct 2008
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Natural resources; institutions; rent seeking.;
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Find related papers by JEL classification:
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- F10 - International Economics - - Trade - - - General
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- Mathieu Couttenier & Marc Sangnier, 2010.
"Living in the garden of Eden: Mineral resources foster individualism,"
PSE Working Papers
- Mathieu Couttenier & Marc Sangnier, 2012. "Living in the Garden of Eden: Mineral Resources Foster Individualism," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 12.05, Université de Lausanne, Faculté des HEC, DEEP.
- Felipe Starosta de Waldemar, 2010.
"How costly is rent-seeking to diversification : an empirical approach,"
Documents de travail du Centre d'Economie de la Sorbonne
10008, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- Starosta de Waldemar, Felipe, 2010. "How costly is rent-seeking to diversification: an empirical approach," Proceedings of the German Development Economics Conference, Hannover 2010 4, Verein für Socialpolitik, Research Committee Development Economics.
- repec:hal:wpaper:halshs-00564920 is not listed on IDEAS
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