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Oil, governance and the (mis)allocation of talent in developing countries

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  • Ebeke, Christian
  • Omgba, Luc Désiré
  • Laajaj, Rachid

Abstract

This paper sheds light on the relationship between oil rent and the allocation of talent, toward rent-seeking versus more productive activities, conditional on the quality of institutions. Using a sample of 69 developing countries, we demonstrate that oil resources orient university students toward specializations that provide better future access to rents when institutions are weak. The results are robust to various specifications, datasets on governance quality and estimation methods. Oil affects the demand for each profession through a technological effect, indicating complementarity between oil and engineering, manufacturing and construction; however, it also increases the ‘size of the cake’. Therefore, when institutions are weak, oil increases the incentive to opt for professions with better access to rents (law, business, and the social sciences), rather than careers in engineering, creating a deviation from the optimal allocation between the two types of specialization.

Suggested Citation

  • Ebeke, Christian & Omgba, Luc Désiré & Laajaj, Rachid, 2015. "Oil, governance and the (mis)allocation of talent in developing countries," Journal of Development Economics, Elsevier, vol. 114(C), pages 126-141.
  • Handle: RePEc:eee:deveco:v:114:y:2015:i:c:p:126-141
    DOI: 10.1016/j.jdeveco.2014.12.004
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    Cited by:

    1. Mohammad Reza Farzanegan & Marcel Thum, 2017. "Oil Dependency and Quality of Education: New Empirical Evidence," MAGKS Papers on Economics 201745, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Joël CARIOLLE, 2016. "The voracity and scarcity effects of export booms and busts on bribery," Working Papers P146, FERDI.
    3. Aramonte, Sirio & Jahan-Parvar, Mohammad & Shugarman, Justin, 2015. "Institutions and return predictability in oil-exporting countries," Finance and Economics Discussion Series 2015-14, Board of Governors of the Federal Reserve System (U.S.).
    4. Thierry Urbain Yogo & Douzounet Mallaye & Gaëlle Tatiana Timba, 2015. "On the Quest of Resource blessing : Re-examining the effect of oil on Income Inequality," EconomiX Working Papers 2015-35, University of Paris Nanterre, EconomiX.
    5. Okey K. N. Mawussé, 2013. "Institutions and scientific research in Africa," Economics Bulletin, AccessEcon, vol. 33(2), pages 1487-1503.
    6. Driouchi, Ahmed, 2014. "Testing of Natural Resources as Blessing or Curse to the Knowledge Economy in Arab Countries," MPRA Paper 58598, University Library of Munich, Germany.
    7. Rémi BAZILLIER & Victoire GIRARD, 2017. "The gold digger and the machine. Evidence on the distributive effect of the artisanal and industrial gold rushes in Burkina Faso," LEO Working Papers / DR LEO 2545, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    8. repec:eee:rujoec:v:2:y:2016:i:4:p:349-374 is not listed on IDEAS
    9. Edwards, Ryan B., 2016. "Mining away the Preston curve," World Development, Elsevier, vol. 78(C), pages 22-36.
    10. Driouchi, Ahmed & Harkat, Tahar, 2016. "Knowledge Economy, Global Innovation Indices, Rents and Governance in Arab Economies," MPRA Paper 73507, University Library of Munich, Germany.
    11. Al Mamun, Md & Sohag, Kazi & Hassan, M. Kabir, 2017. "Governance, resources and growth," Economic Modelling, Elsevier, vol. 63(C), pages 238-261.
    12. Farzanegan, Mohammad Reza & Thum, Marcel, 2017. "More oil, less quality of education? New empirical evidence," CEPIE Working Papers 09/17, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    13. Mireille NTSAMA ETOUNDI, 2014. "Impact de la rente pétrolière sur la demande des pays frontaliers du Cameroun," Working Papers 201417, CERDI.
    14. Dombou T., Dany R. & Tanga T., Achille & Tchoffo, Rodrigue & Kouladoum, Jean-Claude & Tchakounté, Josephine & Djekonbe, Djimoudjiel & Vasegmi, Carole, 2017. "Colonial coinage and financial development," MPRA Paper 83331, University Library of Munich, Germany.
    15. 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.

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