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Education, Rent-seeking and the Curse of Natural Resources

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  • Wadho, Waqar Ahmed

Abstract

Empirical evidence suggests that natural resources breed corruption and reduce educational attainments, dampening economic growth. The theoretical literature has treated these two channels separately, with natural resources affecting growth either through human capital or corruption. In this paper, we argue that education and corruption are jointly determined and depend on the endowment of natural resources. Natural resources affect the incentives to invest in education and rent seeking that in turn affect growth. Whether natural resources stimulate growth or induce a poverty-trap crucially depends on inequality in access to education and political participation, as well as on the cost of political participation. For lower inequality and higher cost of political participation, a high-growth and a poverty-trap equilibrium co-exist even with abundant natural resources.

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  • Wadho, Waqar Ahmed, 2011. "Education, Rent-seeking and the Curse of Natural Resources," MPRA Paper 37831, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:37831
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    Cited by:

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    2. Dennis Ridley, 2021. "Capitalism/Democracy/Rule of Law Interactions and Implications for Entrepreneurship and Per Capita Real Gross Domestic Product Adjusted for Purchasing Power Parity," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(1), pages 384-411, March.
    3. Dennis Ridley, 2017. "Division of Human Capital Creates Surplus Wealth," Bulletin of Political Economy, Bulletin of Political Economy, vol. 11(1), pages 1-20, June.
    4. Gadom Djal Gadom & Armand Mboutchouang Kountchou & Gbetoton Nad ge Ad le Djossou & Gilles Quentin Kane & Abdelkrim Araar, 2017. "The impact of oil exploitation on wellbeing in Chad," Working Papers PMMA 2017-06, PEP-PMMA.
    5. Anum Ellahi, 2020. "Corruption, Tax Evasion, and Economic Development in Economies with Decentralised Tax Administrative System," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 59(3), pages 419-438.
    6. Franklin Obeng-Odoom, 2015. "Oil boom, human capital and economic development: Some recent evidence," The Economic and Labour Relations Review, , vol. 26(1), pages 100-116, March.
    7. Wadho, Waqar & Ayaz, Umair, 2017. "Government Size and Economic Growth in an Endogenous Growth Model with Rent-seeking," GLO Discussion Paper Series 131, Global Labor Organization (GLO).
    8. Dennis Ridley & Aryanne de Silva, 2020. "Game Theoretic Choices Between Corrupt Dictatorship Exit Emoluments and Nation-Building CDR Benefits: Is There a Nash Equilibrium?," The American Economist, Sage Publications, vol. 65(1), pages 51-77, March.
    9. Seyfettin Erdo an & Durmu a r Y ld r m & Ayfer Gedikli, 2020. "Relationship Between Oil Revenues and Education in Gulf Cooperation Council Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 193-201.
    10. Waqar Wadho & Sadia Hussain, 2023. "Ethnic diversity, concentration of political power and the curse of natural resources," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 113-137, April.
    11. Xie, Chengyuan & Jin, Xiaotong, 2023. "The role of digitalization, sustainable environment, natural resources and political globalization towards economic well-being in China, Japan and South Korea," Resources Policy, Elsevier, vol. 83(C).
    12. Waqar Wadho & Umair Ayaz, 2018. "Government size and economic growth in an endogenous growth model with rent†seeking," Economics and Politics, Wiley Blackwell, vol. 30(1), pages 151-179, March.
    13. Hammed Oluwaseyi Musibau & Suraya Mahmood & Agboola Yusuf Hammed, 2017. "The Impact of Foreign Capital Inflows, Infrastructure and Role of Institutions on Economic Growth: An Error Correction Model," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 3(4), pages 35-49, December.
    14. Paredes, Dusan & Rivera, Nathaly M., 2017. "Mineral taxes and the local public goods provision in mining communities," Resources Policy, Elsevier, vol. 53(C), pages 328-339.
    15. Laszlo Szalai, 2018. "Institutions and Resource-driven Development," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 4(1), pages 39-53, June.
    16. Wadho, Waqar Ahmed & Ayaz, Umair, 2015. "Rent-seeking, Government Size and Economic Growth," MPRA Paper 71213, University Library of Munich, Germany.
    17. Menglin Xing & Fuzhou Luo, 2018. "Comparative Study on the Optimization Path of Industrial Value Chain in China’s Resource-Based Cities," Sustainability, MDPI, vol. 10(5), pages 1-20, April.

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    More about this item

    Keywords

    Natural resources; Resource curse; Growth; Human capital; Rent-seeking; Corruption;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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